Intermodal shipping: IANA reports solid third quarter volumes

Spurred by ongoing gains on the domestic container front, intermodal volumes for the third quarter of this year resulted in annual gains for the seventh straight quarter, according to third quarter Market Trends report published by the Intermodal Association of North America (IANA).

Third quarter intermodal loadings—3,652,510—were up 1.4 percent annually, as were two of the four major intermodal equipment categories tracked by IANA. Domestic containers—at 1,266,856— were up 9.0 percent and paced quarterly growth. International containers—at 1,960,667—were down 2.6 percent, marking the third straight quarter that international containers outpaced domestic containers. All domestic equipment—at 1,691,843—was up 6.3 percent, and trailers—at 424,987—dropped 0.8 percent.

Making third quarter intermodal performance all the more impressive is that intermodal posted an annual gain, while diesel prices dipped for much of the quarter and economic growth was largely stagnant. The report’s authors pointed out that intermodal’s strength in the face of economic weakness suggests that rail continues to take market share from trucking.

“Given the economic climate and uncertainty, people are still spending money but are not as aggressive consumers—in terms of spending—as they once were,” said IANA Vice President, Policy and Communications, Tom Malloy. “It is certainly the story as to why volumes are not up entirely, because we have the lagging international aspect, which may see some resurgence in November, as the November dip may not be as precipitous as it has been in the past, with supply chain managers managing tighter inventory.”

On the domestic side, Malloy explained that what is currently happening is a “big time story all the way around.”

And the performance of domestic containers continues to be amazingly strong, he noted.

“What else is up 9 percent in this economy? Nothing, not home sales or savings rates or anything else,” said Malloy. “Part of what is driving this is the aggressive approach [towards intermodal] by motor carriers to moving freight on the rails. Service has improved as has the reliability, service integrity, and transit times, which are all within supply chain managers’ plans.”

Strong future growth for domestic containers is likely, according to Malloy, with somewhat of a flattening of international container volumes, which usually hit their peaks earlier in the year, being likely. International volumes going back to 2000 have represented more than half of annual intermodal volumes, with 51.5 percent in 2000 at 59.8 percent in 2006, which saw its peak in August (with August 2010 being the only other August peak in 20 years).

But for 2011, Malloy said October is likely to be the peak month, with November not being down as much as it was in 2010.

IMC Performance: Intermodal Marketing Companies mostly saw decent percentage gains on an annual basis in the third quarter, with intermodal loads—at 301,419—up 5.9 percent, highway loads down 2.6 percent at 140,896, and total loads up 3.0 percent at 442,405.

IMC intermodal and highway revenue for the first quarter—at $782,538,178 and $205,809,586—were up 18.2 percent and 5.7 percent, respectively. Total revenue—at $993,347,764—was up 18.2 percent. Average revenue per intermodal load—at $2,339—was up 1.3 percent and average revenue per highway load—at $2,613—was up 11.6 percent, and average revenue per highway load—at $1,460—was up 8.5 percent.

“Highway loads were brought down by fuel costs as fuel surcharges get passed along to the IMCs,” said Malloy. “When an IMC gets a load, they make an evaluation for the most preferred way to move it from point A to point B, whether it be an intermodal rate, a truck rate or a combination intermodal-truck rate, which is going to meet a customer’s needs from a cost and service integrity perspective. All of those factors play into what an IMC does with a piece of freight when making decisions.”

And this plays into the fact that highway loads are dropping off due to fuel and intermodal’s length of haul, which has started to drop, and subsequently more it more truck-competitive.

And on a year-to-date basis for IMCs, the average revenue per intermodal load and average revenue per highway load are up 11.7 percent and 10.7 percent, respectively, at $2,556 and $1,442.

“We are seeing IMC intermodal loads are up 5.9 percent for the quarter at 301,419 and all intermodal volume is up 5.2 percent for the year at 10,471,344, which is trending just a little bit higher than average growth and means IMCs are putting more onto the rail system and less onto the highways,” said Malloy. “IMC intermodal loads year-to-date are up 5.3 percent at 871,665, and those year-to-date trends align, with IMCs selling intermodal and matching growth rates that are trending towards the industry average.”