Intermodal volumes see gains in Q4, with full-year 2023 volumes down, reports IANA

Intermodal volumes finished the fourth quarter and full-year 2023 on different paths, with the former showing annual growth and the latter showing annual declines, according to data issued this week by the Intermodal Association of North America (IANA).

In its “Intermodal Quarterly,” IANA reported that total fourth quarter intermodal volume, at 4,367,940 units, rose 3.1% annually, marking the first time there has been annual growth in the past nine quarters. Domestic containers, at 2,108,322, saw a 6.0% annual increase, and trailers, at 168,814, fell 21.6%, and was the lone intermodal segment to see an annual decline. All domestic equipment, which is comprised of trailers and domestic containers, came in at 2,277,136, for a 3.3% annual increase. And ISO, or international, containers, at 2,090,804, rose 2.9%.

IANA said that total fourth quarter volume represented the highest quarterly total for all of 2023 and represented the best quarterly performance going back to the third quarter 2022.

Full-year 2023 intermodal volume was down across the board, with total volume, at 16,669,980, off 5.9% annually. Trailers, at 704,970, decreased 23.7% annually, and domestic containers, at 8,048,460, were off 1.2% annually. All domestic equipment, at 8,753,430, saw a 3.5% decrease, and ISO containers dropped 8.4%, to 7,916,550.

In the “Intermodal Quarterly,” IANA explained that while consumer spending on goods was stable in 2023, wholesalers and retailers were largely able to meet demand by using existing inventories and by heavily discounting out-of-season inventory, adding that international intermodal saw a consequent volume loss across various U.S. regions, with inventories being worked down. And it added that the divergence between the broader economy and the freight economy moderated in the fourth quarter as bloated inventories and consumers’ preference for services over good diminished.

IANA President & CEO Joni Casey told LM that a convergence of factors drove fourth quarter intermodal growth, including: higher-than-predicted economic growth along with, increased consumer confidence and spending due to the lower risk of inflation; resolution of the West Coast labor contract impacting imports; decreasing inventories; and annual comparative statistics.

With inventories starting to become more normalized, Casey said that serves as a positive development for intermodal volumes in 2024.

“Anticipated growth in manufacturing and consumer spending and a predicted return to JIT [just-in-time] inventory replenishment should benefit intermodal, as more and consistent import volumes will keep traffic in the ‘pipeline,’” she said.

With the fourth quarter posting annual quarterly growth for the first time in more than two years, Casey observed that, when looking at 2024, and allowing for the typical Lunar New Year slowdown, intermodal is poised for continued growth throughout 2024.

That growth, though, comes with the caveat that in the current market, trucking has placed intermodal at a competitive disadvantage, with improvement over the course of 2024 and into 2025 expected to be incremental, as noted in the “Intermodal Quarterly.” And with spot market trucking rates having bottomed out, IANA said that it cuts both ways, in that stronger rates will likely slow the exit of financially stressed small trucking firms from the market—especially if diesel prices continue to head down.

Globally, IANA added that there are various developments that represent what it called an “X factor,” going forward, including the Red Sea shipping attacks, which could continue to disrupt global shipping patterns and reduced water levels in the Panama Canal, with the combined effect of these things potentially shifting more port activity to the U.S. West Coast ports at the expense of Gulf and East Coast ports. Which, it added, would serve intermodal well versus trucking, due to longer shipment distances to population centers.