First quarter intermodal volumes see more declines, reports IANA

First quarter 2023 intermodal volumes remained on an ongoing path of declines, according to the most recent edition of the “Intermodal Quarterly” report, which was recently issued by the Intermodal Association of North America (IANA).

Total first quarter volume—at 3,940,153 units—was down 8.6% annually, marking the seventh quarter of annual declines and the second largest decline over that period.

Trailers again represented the steepest annual decline, down 28.8%, to 191,941, falling for the seventh consecutive quarter of double-digit declines (with trailers representing 4.9% of total intermodal loadings compared to 7.0% in the fourth quarter 2020). And domestic containers—at 1,927,682—were off 5.8%, marking its second straight negative quarter, following three straight quarters of growth. All domestic equipment, which is comprised of trailers and domestic containers, at 2,119,623, was off 8.5%, to 2,119,623. ISO, or international containers—at 1,820,530—were down 8.8% annually, to 1,820,530, following two quarters of minimal annual gains.

In the report, IANA explained that the first quarter’s volume declines were not specific to one intermodal equipment segment, as all three groups it tracks were down annually.

“The sluggish start to 2023 was a result of lower levels of domestic output and international imports,” said IANA in the report. “The intermodal network has seen improvements in terminal velocity, chassis supply, drayage availability and rail network fluidity. However, consumer spending on goods slowed, inventories remained elevated, and truckers added driver and equipment capacity.”  

IANA President and CEO Joni Casey told LM that on a general basis intermodal industry growth remains dependent on the business environment and external factors, including prevailing economic conditions—inflation vs. recession; consumer spending; and excess OTR (over-the-road) trucking capacity. 

“However, while volume numbers are still off from a year ago, they have increased week-over-week for the last month, which is a promising sign,” she said. “Cross-border trade with Mexico is one anticipated growth area for intermodal as well.”

Addressing inventories, as companies take steps to draw down inventories and get them to levels that are more in line with current demand patterns, Casey noted that as inventories rebalance, freight volumes should increase, adding that intermodal is well-equipped to take a share of that growth, as network fluidity and equipment availability recovers.

As for the long-running decline in trailer volumes, she said that the decline is expected to continue, also observing that to the extent that this traffic is being converted to trailers, does present a major concern.

Looking ahead to the second half of the year, Casey described the period as a moving target, in a sense.

“The ‘new normal; seems to be moving towards ‘flatter’ longer peaks,” she said. “If gains in weekly volumes continue, we may see more of a traditional peak season—ramp up to September, and holding through October and November heading into the Holidays.”

What’s more, the report highlighted how consumer spending levels remain stronger than anticipated, with the first quarter seeing solid spending on a seasonally adjusted basis, against the backdrop of consumers dealing with the duo of higher interest rates and saving less money each month than they did prior to the pandemic.

On the import side, IANA described it as a wild card, in regards to the 2022 shift in the re-routing of containers from the West Coast to the East Coast and Gulf Coast.

“The all-water rerouting of containers to the East Coast and Gulf Coast also has moved some volume from rail intermodal to truck, which is more competitive in those shorter lanes,” it said. “Pending a new West Coast labor agreement, at least a major portion of that freight should return to the West Coast and more intermodal-friendly lanes.”