Transportation news: IANA report says intermodal volumes are strong despite market conditions

Jeff Berman, Senior Editor -- Logistics Management, 11/16/2007

CALVERTON, Md.—Despite the current economic slowdown, which has taken its toll on the freight transportation industry due to things like decreasing import volumes and domestic freight demand, total intermodal growth for the third quarter of this year was the second-best quarter ever recorded, according to Intermodal Market Trends & Statistics, a quarterly report published by the Intermodal Association of North America (IANA).

IANA reported that the total quarterly volume 3,618,617 loadings trails only last years third quarter, which came in at 3,699,544 units—or 2.2 percent better. And it added that growth in the third quarter outperformed the second quarter of this year by 3.5 percent. Domestic containers for the third quarter were 10.0 percent ahead of last year at 919,085, and international intermodal volume was 2,172,645, which was 3.7 percent off of the third quarter in 2006.

Although there is a domestic intermodal uptick—which is occurring during a time in which there is plenty of extra long-haul truck capacity, coupled with slumping retail sales, and an ongoing decline in the housing market, among other economic factors—that does not portend that domestic intermodal volumes will outpace intermodal volumes anytime soon, according to IANA Vice President of Member Services and Business Development Thomas Malloy.

“The global marketplace and the U.S. demand for imported goods, while it is in somewhat of a neutrality position right now, is not going to change long-term, Malloy told Logistics Management in an interview today. “What you have here is domestic containers showing more growth activity than it has in the past but probably it is looking more dramatic because of international being somewhat flat.”

In terms of the domestic output occurring at a time when the economy is still sluggish, Malloy pointed out that the quarterly growth is being reflected with volume in the 900,000 container range, compared to the roughly 1.4 million international units occurring in the same timeframe. And another issue affecting the domestic intermodal increase is what Malloy referred to as the energy angle.

“Fuel prices, the driver shortage and the excess capacity out there, when factored together, really hit home from a truckload perspective,” said Malloy. He cited a presentation at this weeks IANA Transcomp event in Atlanta, which focused on the environmental impact of freight movements and how more and more truck owners are being challenged by fuel prices, the driver shortage, and capacity, and are turning to intermodal more as a diversified service offering for their transportation portfolios.

Malloy also explained that there appears to be an uptick in the transloading of international goods.

“While international volumes—as reported as being intact by a railroad—are somewhat sluggish, one of the things than can be contributing to domestic containers is transloading,” said Malloy.

Trailer volumes were off 13.5 percent at 526,887, following the second quarter’s 14.2 percent decline, according to IANA. The lack of trailer growth, said Malloy, can be partially attributed to a trend which has been occurring over the last three years or so. He explained that “trailers used to be freely supplied by the majority of rail carriers to something that is now less than freely supplied,” which means that the rail carriers are encouraging private asset ownership amongst their customers.

Future intermodal growth:
Looking ahead, Malloy said the possibility of future intermodal growth is saddled with the same type of market factors that is currently hindering the economic environment of North America, including the housing slump, poor retail performance and lethargic consumer spending, the automotive market, and housing-related imports.

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