Rail and intermodal looks rosier in 2016

Logistics Management will soon ring in the new year with our highly anticipated transport forecast. The 2016 Rate Outlook: Global economic dip causes ripple effect on pricing, features for the first time, Tony Hatch, a rail analyst and principal of New York-based ABH Consulting.

Hatch notes that intermodal is set to surge due to driver shortage issues and reliance on public spending for highway infrastructure. However, he also points to environmental issues, noting that rail has fewer carbon consequences.

“Intermodalism is set to grow even faster, as more business is conducted in cross-border,” says Hatch. “The North American Free Trade Agreement [NAFTA] is becoming far more cohesive—one only has to look at the what’s happening in the automotive sector to see that.”

Hatch adds that while railroads would prefer to have more control over rates, most of that is determined by third-party logistics providers.

“Led by continuous market share gains in intermodal, both domestic and international, rails will be even more important to the national and continental supply chain than they are today,” he says, “and rates will keep pace with inflation through 2016.”
According to Hatch, shippers will, at the same time, remain heavily reliant on motor carriers for most of the movement—especially from “the first and last mile,” says Hatch.

Readers may also wish to track Tony’s insights shared with readers of the Financial Times, where he champions the “success story” of North American rail freight.