WALTHAM, Mass.—While fuel prices are soaring to historic highs, several recently released reports are suggesting that more shippers are turning to intermodal transportation to move freight rather than relying solely on over-the-road trucking.

The recent reports include the Association of American Railroads' release that intermodal trailer volumes were up year-over-year for five consecutive weeks from May 10 through June 7; the Intermodal Association of North America's report that domestic intermodal loadings for the first quarter of 2008 were up 1.7 percent; and the FTR Associates and Gross Transportation Consulting report that April 2008 domestic intermodal revenue movements were up 9.6 percent.

“We were skeptical at first, thinking that was not going to happen, but by the end of the fourth quarter, middle of the first quarter of 2008, it was pretty clear that this was happening,” said Eric Starks, president of FTR Associates. “High prices are pushing a lot of freight to the intermodal side domestically.”

Along with cost, improved service on the rails over the past few years is another important factor for shippers who are considering intermodal, said John Larkin, managing director of Stifel Nicolaus' Transportation and Logistics Group.

According to Larkin, that combination of improved rail service and lower rates are starting to resonate with shippers. “With diesel at almost $5 per gallon, that puts truckers' fuel costs at [nearly] a dollar a mile or more—which is almost incomprehensible since it was not that long ago when the overall freight rate was a dollar a mile,” said Larkin.

But despite the various signs indicating that intermodal is on the upswing, a recent Logistics Management survey of 645 shippers found that 455—or 71 percent—of the respondents are currently not using intermodal to offset transportation costs.

The reasons for not using intermodal ranged from product type, to transit time increases, to too many shipments that do not align well with intermodal service offerings, among others. “Process wise, [intermodal] is a hard thing to get up and running, and due to higher fuel prices we are merely trying to stay above water to get late loads covered, so there is not much time to start new processes,” commented one shipper respondent.

However, the shippers who indicated they are using intermodal said they have seen improvements when it comes to lower fuel costs, lower cost per transported items, better logistics planning processes, and an increase in capacity options.

“We are seeing the most benefits for longer-hauls,” said Steve Fisher, director of international logistics at Kendall-Jackson Wine Estates Ltd. in Santa Rosa, Calif. “The longer the distance the greater the savings, and if we can convince a customer [to use intermodal] in a situation where we are well planned we will take intermodal every time.”