Subscribe to our free, weekly email newsletter!



Lower diesel prices do not hinder intermodal

By Jeff Berman, Group News Editor
June 13, 2012

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 headshot
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. .(JavaScript must be enabled to view this email address).


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!

Recent Entries

Earlier today, the United States Senate signed off on a six-year surface transportation authorization, according to various media reports. The bill, entitled the Developing a Reliable and Innovative Vision for the Economy (DRIVE) Act, passed by a 65-34 margin and comes at a time, when the most recent extension for surface transportation funding expires tomorrow, July 31.

Demand for the $500 million in available funding for the United States Department of Transportation’s TIGER (Transportation Investment Generating Economic Recovery) competitive grant program was easily trumped, with applications for the seventh round of TIGER grants coming in at $9.8 billion, or nearly twenty times the available amount, DOT said this week.

Global logistics managers will be tracking the progress of the controversial Trans-Pacific Partnership (TPP) talks in Maui, Hawaii this week, as negotiating parties hope to finalize the agreement.

As has been noted in recent coverage on this site in regards to Peak Season, one underlying theme has been, and remains, how Peak Season is not what it used to be. That is not to say there will not be any Peak Season-related activity. Make no mistake, there will be and things driving it from the seasonal nature of business activity and cargo flows to higher demand and increased e-commerce activity, among others.

UPS Access Point locations serve as a replacement delivery address when consumers are not at home to receive a package or when consumers want a delivery to go somewhere other than their residence.

Article Topics

Blogs · Intermodal · Diesel Prices · Diesel · All topics

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2015 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA