Optimism surrounds intermodal outlook
November 18, 2010 - LM Editorial
Regardless of the raw data, which largely points to a slowly moving economic recovery, one thing which cannot be overstated is the better-than-good run intermodal is on these days.
That was made abundantly clear at this week’s TransComp in Ft. Lauderdale. In my meetings with providers and listening in on sessions with shipper panels, all signs point to intermodal being prominent in shippers’ transportation spend and mix to varying degrees.
Two reasons for this are likely things you have heard before or read on this Web site perhaps. They include being green and a good corporate citizen along with hedging against a highly anticipated truck driver shortage with CSA and new HOS rules waiting in the wings, which saw a projected 10 percent reduction in capacity in 2011 being bandied about. Another reason is a potential hike in diesel prices, which are up roughly a cumulative dime per gallon in just the last two weeks.
Is that 10 percent projection too high or too low? Clearly, it is too early to tell. But it will have an impact on how shippers go about moving freight and factor into decisions when it comes to modal shifts on a contractual and spot market basis.
That said, it is likely good news for IMCs and truckload carriers that play in that space, and, of course, those on the brokerage side, too.
Even with a relatively anemic economic recovery occurring, domestic intermodal is showing strength in a major way. That is more than clear if you happened to see the recently-released third quarter Market Trends report from the Intermodal Association of North America.
The big takeaway of that report: domestic intermodal loadings at 1,591, 227 were the highest ever recorded in a single quarter in the history of the Market Trends report. Think about that for a second. It is sort of crazy, considering we are still very much in the weeds when it comes to the economy.
Why did this happen with domestic intermodal in the third quarter? One reason is that domestic container shipments continuing to outpace the overall economic recovery in conjunction with intermodal shipments gaining share over other modes of freight transportation, according to IANA.
“Domestic activity is off the charts right now, especially for domestic containers of North American origin and termination, and are up over previous high points from 2008 and 2006,” said Tom Malloy, IANA VP of member services, when we talked about the report a few weeks back. “This is a good story. Had there been more containers [available] there likely would have been increased domestic container activity. This means equipment managers are doing a much better job of managing load-to-load churn, which is key for the companies that own them and the manager that runs them in order to maximize revenue opportunities for these pieces of equipment on an annual basis.”
And while domestic intermodal is going great guns, international intermodal is growing at an even faster clip—it was during the third quarter anyhow, with 28.1 percent annual growth, according to IANA. This marks the second time since the second half of 2006 that international topped domestic containers.
At a time when terms like “cautious optimism” and the “new normal” are vying to become new ways of describing the state of our economy, intermodal is clearly doing its best to change that conversation to one with terms like “healthy recovery” and “major rebound.” Now, that won’t happen soon probably, but when it does there is a strong chance we will look at what intermodal is doing now and perhaps point to it as the beginning of when things started to get good…again.
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