Lower diesel prices do not hinder intermodal

By Jeff Berman, Group News Editor
June 13, 2012 - LM Editorial

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

Getting items ordered online to your home on a same-day basis is as important or relevant as it needs to be, and it depends on things like the type of products being ordered and its relative urgency as well. This was put into better perspective for me during a recent conversation I had with Dr. Victor Allis, CEO of Quintiq, a supply chain vendor specializing in a single optimization and planning platform.

Diesel prices dropped for the third straight week, with the average price per gallon seeing a 2.5 percent decline to $3.869 per gallon, according to the Department of Energy’s Energy Information Administration (EIA).

Seasonally-adjusted (SA) for-hire truck tonnage in June dropped 0.8 percent on the heels of a revised 0.9 percent (from 1.0 percent) increase in May and was up 2.3 percent annually.

Even as Congress was putting the finishing touches on a 10-month short-term funding extension to the federal aid highway bill that temporarily averts a funding crisis, Transportation Secretary Anthony Foxx was ripping the measure as a short-term “gimmick” that once again fails to adequately fund U.S. infrastructure needs in the long run.

ISI is comprised of Integrated Services, ISI Logistics and ISI Logistics South and is focused on the warehousing and transportation needs of automotive shippers. RRTS said that in 2013, Integrated Services generated revenues of approximately $21 million adding that Integrated Services is expected to be accretive to Roadrunner’s earnings in 2014.

Article Topics

Blogs · Intermodal · Diesel Prices · Diesel · All topics

About the Author

Jeff Berman, 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.

Comments

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


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA