Intermodal numbers for June are very promising

U.S. railroads originated 996,022 intermodal containers and trailers in June, which was up 5.2 percent—or 49,168 units—over June 2011 for an average of 249,006 units per week.

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While I was out of the office part of last week, celebrating our Nation’s birthday, my inbox received the June edition of the Association of American Railroads’ (AAR) Rail Time Indicators. If you follow the railroad and intermodal sectors, it is hard to find a more definitive (and very intuitive) resource for data in the most recent month.

Perhaps the biggest takeaway in the June edition was just how well of a month intermodal had in June. Consider this: U.S. railroads originated 996,022 intermodal containers and trailers in June, which was up 5.2 percent—or 49,168 units—over June 2011 for an average of 249,006 units per week.

Taking the June intermodal data another step further, the weekly average of 249,006 units per week is the highest average for any June in history and the third highest average for any month in history.

Given the current economic backdrop, that is pretty impressive.

Here are some other AAR-provided numbers for which speak to a very strong and sustainable intermodal market:
-second quarter 2012 intermodal loadings were up 4.0 percent—or 121,369 units—annually and were up 3.3 percent—or 193,541 containers and trailers—over the first six months of 2011.

And through June year-to-date intermodal loadings were slightly ahead of 2006’s pace. This is a good thing in that it sets the table for what could be a record-breaking 2012.

“[This sets] up the very real possibility that 2012 will be the highest-volume intermodal year ever for U.S. railroads,” said the AAR. “The recovery since 2009 has been remarkable. In the first six months of 2009, average weekly intermodal loadings were 185,075 containers and trailers. In the first six months of 2012, the average was up to 232,682 containers and trailers, a 25.7 percent increase. Assuming 240 intermodal units per train, the improvement in 2012 over 2009 is equal to nearly 200 additional full-size intermodal trains per week.”

It is no secret that intermodal has become somewhat of a “go to” mode for shippers for a variety of reasons. In the Rail Time Indicators report, the AAR repurposed some reasons as to why this is the case:
“-Better service. Railroads have put an enormous effort into getting the bugs out of their
intermodal operations. Rail intermodal operations today are more efficient and
productive than they were even just a few years ago.
-Huge investments. Railroads have spent billions of dollars on infrastructure and
equipment — terminals, yards, double- and triple-tracking, increased tunnel clearances,
improved signaling systems, etc. — related to intermodal service. These investments are
now paying off in terms of more productive, more reliable intermodal operations.
-Fuel costs. On average, railroads are four times more fuel efficient than trucks. Higher
fuel costs hurt railroads, but hurt trucks even more.
-Highway congestion and truck driver shortages. It takes a special kind of person to be a
long-haul truck driver, and finding enough of these people is a constant challenge for
trucking companies. Annual driver turnover often approaches 100%.
-International trade. As noted above, more than half of U.S. rail intermodal consists of imports and exports. Year-to-date volume (measured by loaded import and export 20-foot equivalent units, or TEUs) at seven major U.S. ports by the AAR was up 1.3% in the first four months
of 2012 compared with the same period in 2011.
-Conversion of boxcar traffic. Some rail traffic that used to go by boxcar now goes by container. In 1994, boxcars accounted for 11.0% of rail traffic. By 2004, it was down to 4.5%. In 2010 (the most
recent year available), it was 2.6%. Part of this decline is due to lost traffic — newsprint,
for example, typically moves in boxcars, and because fewer people are reading printed
newspapers, railroads have fewer newsprint moves. But some of the decline is
conversion. Auto parts, for example, now often move by container.”

Given 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.


About the Author

Jeff Berman, Group News Editor
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman

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Not Your Grandfather's Intermodal Transportation of freight in containers was first recorded around 1780 to move coal along England’s Bridgewater Canal. However, "modern" intermodal rail service by a major U.S. railroad only dates back to 1936. Malcom McLean’s Sea-Land Service significantly advanced intermodalism, showing how freight could be loaded into a “container” and moved by two or more modes economically and conveniently. As with all new technologies, there were problems that slowed the growth, which influenced many potential customers to shy away from moving intermodal.
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