Lower diesel prices do not hinder intermodal

Proponents of intermodal transportation often point to fuel savings as a significant benefit of leveraging intermodal for moving freight.

By ·

Proponents of intermodal transportation often point to fuel savings as a significant benefit of leveraging intermodal for moving freight. Naturally, there are also other things that make the intermodal case for them, too, like solid service levels and decent transit times that offer what many rail and intermodal service providers describe as “truck-like” quality.

But back to diesel prices. If you read this site closely, then you are aware of the fact that diesel prices have gone down for nine consecutive weeks. That is right, nine. And before that, they were up for nearly three months straight and soared above the $4 per gallon mark. In the last nine weeks, though, much has happened to bring down both gasoline and oil prices. Some of it pertains to the troubling economic situation in Europe, slow growth in China, and, of course, disharmony of all kinds in OPEC-based nations.

When diesel prices started going down, I was wondering if this would create some type of instant and widespread modal shift for shippers to move from intermodal back to truckload, but after speaking with Steve Van Kirk from Schneider National, I soon learned my assumption was not entirely correct for a few different reasons.

“[Shippers] are very concerned about fuel prices,” he said. “And that has really helped intermodal growth. While it is true diesel is down from previous levels, it is still fairly close to $4 per gallon. If you look at that price point on a historical basis, it is high. And if you anticipate where oil and diesel prices are heading in the coming years, most people will likely tell you prices are going up.”

What is currently happening now is what Van Kirk referred to as a market blip and for shippers with a long-term perspective of managing their freight, they see that intermodal will play a key part for them in managing their fuel costs as costs fluctuate and increase going forward.

Oil and gasoline prices, while often volatile, are in a manageable place at least for the time being. Intermodal shippers are smart to sit tight as prices do their thing. Through the first 20+ weeks of the year intermodal container and trailer loadings are up just about 3 percent. That is not a bad number at all, especially when one thinks about diesel prices have been lately-and where they might be headed….again.


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

Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!

Article Topics

Diesel · Diesel Prices · Intermodal · All Topics
Latest Whitepaper
B2B Sellers Prefer a Unified Approach for Ecommerce
A new study from Forrester Consulting, commissioned by NetSuite, found that many midmarket, B2B sellers say their ecommerce solutions have contributed to their growth in sales, new customer acquisitions and improved customer relationships.
Download Today!
From the August 2016 Issue
A growing number of low-cost lift trucks offer new avenues for pairing equipment and applications, but less cautious buyers might find that small up-front costs come at a steep price. Selecting the proper lift truck, lift truck tips 2016, Choosing the right Lift Truck
Megatrends in ocean freight
Ocean Cargo Roundtable: What’s in store for 2017?
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Getting the most out of your 3PL relationship
Join Evan Armstrong, president of Armstrong & Associates, as he explains how creating a balanced portfolio of "Top 50" global and domestic partners can maximize efficiency and mitigate risk.
Register Today!
EDITORS' PICKS
2016 Quest for Quality: Winners Take the Spotlight
Which carriers, third-party logistics providers and U.S. ports have crossed the service-excellence...
Regional ports concentrate on growth and connectivity
With the Panama Canal expansion complete, ocean cargo gateways in the Caribbean are investing to...

Digital Reality Check
Just how close are we to the ideal digital supply network? Not as close as we might like to think....
Top 25 ports: West Coast continues to dominate
The Panama Canal expansion is set for late June and may soon be attracting more inbound vessel calls...