Second quarter intermodal volumes are on the right track, says IANA

Much like the first quarter, intermodal volumes in the second quarter remained on a steady growth path, according to the most recent edition of the Intermodal Market Trends & Statistics report from the Intermodal Association of North America (IANA).

Second quarter intermodal loadings—at 3,716,321—were up 5.2 percent annually and IANA officials said it marks the best quarterly result in a year, with the annual growth rate topping the first quarter’s 2.9 percent gain.

In the second quarter, three of the four major intermodal equipment categories tracked by IANA also showed growth on an annual basis. Domestic containers—at 1,383,599—were up 12.5 percent, while trailers fell 10.2 percent to 381,151. All Domestic Equipment—at 1,764,750—was up 6.7 percent.

But the real intermodal star for the second quarter was international containers, which was up 3.9 percent at 1,951,571. Despite an ordinary annual growth rate, IANA said that this output represents international’s highest second quarter volume in absolute terms since 2008.

IANA said that quarterly international growth was “roughly in line” with overall container imports, noting that port-released figures suggest that U.S. container imports were up almost 4 percent in the second quarter, with gains on the West Coast and East Coast at about 3 percent and 5 percent, respectively. And up North, the Ports of Prince Rupert and Vancouver posted nearly 20 percent year-over-year gains in the quarter, said IANA.

Addressing the 12.5 percent gain for Domestic Containers, IANA noted that it is less than the 14.9 percent annual uptick in the first quarter but said it is still “remarkable,” when taking the softening economic climate into consideration. As an example, it observed how first quarter job growth at nearly 700,000 dwarfed the second quarter’s 328,000.

Other factors contributing to continued gains on the domestic side include improving rail service, with average intermodal train speeds of 32 mph in the first half of 2011 topping the first half of 2011 at 31 mph, as well as lower terminal dwell times which are now near recession lows when volume declines lessened congestion. Another factor highlighted by IANA is tight trucking capacity, with many truckers not willing to invest in new equipment and is playing a role in shippers turning to intermodal.

“The growth in domestic intermodal traffic is expected to continue for the remainder of this year and into 2013 without interruption,” said IANA President and CEO Joni Casey in an interview. “Factors influencing this trend are: consistent service metrics, increased terminal velocity, tight over-the-road trucking capacity, fluctuating fuel prices, and regulatory burdens on motor carriers (i.e. HOS and CSA regulations).”

Casey added that on the domestic side railroads anticipate continued growth of intermodal moves, noting that shorter haul markets offer additional potential.  And as imports pick up, albeit it marginally, she said there will be more opportunities for transloads from the West Coast that will move by rail.

Intermodal Marketing Companies had a strong second quarter performance, with intermodal loads—at 323,485—up 9.7 percent and highway loads down 7.0 percent at 128,486, and total loads up 4.4 percent at 451,971.

Intermodal Marketing Company (IMC) intermodal and highway revenue for the second quarter—at $840,753,508 and $187,797,696—were up 9.6 percent and down 9.6 percent, respectively. Total revenue—at $1,028,551,204—was up 5.5 percent. Average revenue per intermodal load—at $2,599—was down 0.1 percent and average revenue per highway load—at $1,462—was down 2.9 percent.

IANA said that the second quarter marked the second time ever that IMC intermodal volume topped 100,000 loads in all three months of the quarter, with annual growth in May the strongest month, up 14 percent annually. It added that IMC highway volumes continued to decline even as stress on trucking capacity abated somewhat due to a sluggish economy. 

Many analysts have told LM that even with a flattish economy and flattening trucking volumes, coupled with no real indications pointing to motor carriers adding capacity any time soon, it stands to reason that intermodal is in a pretty good spot when it comes to its future performance prospects.

“Although intermodal has always offered shippers the opportunity to reduce cost versus over-the-road, it formerly came with an associated price tag of unreliable service that made the cost/service package unpalatable to many shippers,” said Larry Gross, senior consultant at FTR Associates. “What has changed in recent years is that although intermodal service is still slower than truck, the all-important reliability of the service has achieved an acceptable level.  This is fueling an increasing proportion of shippers who now seek to take advantage of the potential savings intermodal has to offer.  And intermodal has been gaining share versus truck.”

Gross added that intermodal is less sensitive to many of the factors that are working to increase trucking costs, including lower reliance on the driver pool and greater fuel efficiency.  And as truck capacity continues to tighten over the next few years, he said intermodal will provide an important alternative, with substantial investments being made in new terminals, particularly in the eastern region, which will serve to open up new territories and shorter lanes to intermodal service.