Domestic intermodal holds key to future growth as trade uncertainty and long-term declines persist, says intermodal expert Larry Gross

The state of the North American intermodal market could be described as somewhat bifurcated, based on a presentation at last week’s RailTrends conference in New York by noted intermodal expert Larry Gross, president of Gross Transportation Consulting.

RailTrends was presented by Progressive Railroading magazine and independent railroad analyst Tony Hatch.

Gross explained that international and domestic intermodal volumes and performance respond to different criteria in the form of economic drivers.

“The headline now is that we are seeing a precipitous drop in international volume now as a result of the [tariff-driven] pull-forward that occurred earlier in the year,” he said. “But on the other hand, domestic is looking a little bit better. One of the things that makes the monthly numbers look very volatile is the fact that there are different numbers of working days in each month. And October of this year had about as many working days as you can possibly have. So, that tends to bump the numbers up. And it's to the tune of about 7% when we went from September to October, but you see that drop adjusted for working days is going down quite fast. On the other hand, we're seeing a nice uplift in the domestic numbers all the way since June—and a lot of that is typical seasonal activities.”

Looking at cross-border intermodal, both north and south of the border, Gross said that there are some notable differences.

One is between the U.S. and Canada internationally, with the U.S. being affected by the tariff situation in Canada and not south with Mexican cross-border traffic, which he observed is seeing strong growth.

“Since the middle of the year, we have started to see normal seasonal [intermodal] activity, or a seasonal pattern, which we have not seen since 2019, with the impact of the pandemic and the post-pandemic surge. Now, it looks like we are starting to see at least what used to be called normal activity.”

Addressing the 2025 Peak Season, Gross said that it came early in 2025, for intermodal, occurring around the 35^th week of the year, whereas it typically occurs around the 39^th week of the year. 

In 2023 and 2024, Gross explained that there were very late peaks, which were a function of tariff impacts and pull-forwarding.  

As for projected intermodal volumes, Gross said he expects negative annual comparisons through the end of 2025 and well into the first quarter 2026, with regard to U.S. domestic intermodal.

“Where intermodal really controls its destiny is on the domestic side,” said Gross. “This is really where the battleground is between intermodal and trucking. Since 2016, it has been a difficult picture, in terms of share. The share of U.S. long-haul, dry van, and reefer truck movements has gone from as high as 7% down to the 6% range, where we are stuck right now,” he said. “A year ago, at this time there was an uptick but that was not sustained.”

On a longer-term basis, Gross explained that the ongoing freight recession, now into its third year, due to the amount of trucking capacity added into the market during the post-pandemic surge, is part of a longer-term problem. One factor related to that was strong import growth, with recent performance being unsustainable, with the sector not able to keep up those growth numbers.

“We're going to see some retrenchment there,” he said. “This is tariff effects and various other extraneous forces. GDP is up 21% [since 2015]. Trucking is up a little bit less than that. The reason trucking is trailing is because we're seeing a greater content of service, services in GDP, and services don't require freight, and also a tendency towards shorter hauls with regard to trucking. If you look at where intermodal is, whether it's international or domestic or the total, we're below. So, we've got a long-term issue here. We're only about 4% or 5% above where we were 10 years ago with regard to volume. We don't just have a three-year problem, and waiting for the Goldilocks conditions of market in order to grow is not really the strategy. Unless something changes here, I don't really think we're going to see a significant growth and a significant recovery in market share.”

What could drive up that market share, according to Gross is domestic intermodal, which, at the moment, is not seeing a significant increase in share.

As an example, he pointed to a 2,000-to-2,500-mile Western line single-haul that has a much higher share than the longer hauls involving two railroads.

“The current reality is we have a lot less volume moving in the 1,000-to-2,000-mile length of haul than even 750-to-1,000 miles,” he said. “That is because the ‘donut hole,’ and a lot less volume moving in the 1,000-to-2,000-mile length of haul than even 750-to-1,000. That is because the donut hole typically involves two railroads. The two scenarios here are, one, let’s just bring the volume, or the share, in the donut hole, and share in the ultra-long haul up to where the previous mileage range share is. If we can even do just that, it raises U.S. volume by about 8%. And if we can bring the donut hole volume up even more and just get it halfway between the share of 750-to-1,000 and 2,000-to-2,500 then we can grow volume 25%. These are significant numbers. Mergers are one way to do it but not the only way to do it.”

Additional factors to monitor, which Gross said could impact intermodal, include:

• Global shipping routes: If the Red Sea and Suez Canal fully reopen, he said shipping from Asia to the U.S. East Coast will become cheaper and faster again. This will shift more import volume from the West Coast to the East Coast, increasing intermodal opportunities since the East Coast relies more on inland transport;
• Trucking and driver supply: Current U.S. administration actions—including policies related to immigration and non-domiciled commercial driver’s licenses—may affect the trucking driver pool. While the trucking industry historically cannot right-size capacity on its own, Gross said regulatory changes could tighten capacity, potentially raising trucking rates; and
• Other uncertainties need attention, such as Panama Canal constraints; Section 301 tariffs, including suspensions and legal challenges, and ongoing uncertainty around trade actions involving China and Canada

And he added that other key intermodal themes to watch include: Peak season is likely already behind us; international volumes will remain under pressure; domestic truckload demand is unlikely to improve; intermodal could see a modest rebound if trucking capacity tightens due to driver shortages; comparisons through late 2025 and early 2026 will be difficult; and the overall volume outlook for 2026 is flat to slightly down.