Q3 intermodal volume sees slight annual decline, reports IANA

Third quarter intermodal volumes saw a slight annual decline, according to the most recent edition of the Intermodal Quarterly Report, which was issued this week by the Intermodal Association of North America (IANA).

Total quarterly intermodal volume—at 4,535,835 units—fell 1.0% annually. A bulk of the decline was due to a 27.7% annual decline, for the trailers segment, to 209,061, its lowest level on record. Domestic containers—at 2,012,662—saw a 1.5% annual increase, and all domestic equipment (comprised of trailers and domestic containers)—at 2,221,723—saw a 2.2% annual decline. ISO, or international, containers eked out a 0.1% annual increase, to 2,314,112.

The 1.0% third quarter annual decrease was preceded by a 9.8% fourth quarter 2021 annual decline, a 6.6% first quarter decline, and a 4.3% second quarter decline. The report explained that with the annual decrease down roughly 48,000 units, it “represents less than one day’s volume,” adding that “external factors impacting intermodal traffic were a potential rail strike and Hurricane Ian.”

While intermodal volumes were down annually for the fifth consecutive quarter, IANA noted that it represented the smallest decline over that period.

“Intermodal volume surged after the worse of the pandemic in the third quarter of 2020 with strong network throughput supporting increased consumer demand for goods,” the report observed. “The growth overwhelmed the intermodal supply chain, and volume began to drop during the third quarter of 2021. Weaker volumes have been experienced ever since.”

Addressing its specific segments, the report said that the 1.5% annual increase for domestic containers represents the weakest quarterly growth number of the year as a loosening truck market provided greater competition for domestic intermodal.

For ISO containers, the slight third quarter increase was the first time the segment was up on the heels of significant declines over the previous three quarters, coupled with better network throughput, as well as weaker annual comparisons to the same period in 2021.

As for trailers, it noted that the 27.7% annual decline was the result of improving trucking capacity and shippers replacing their trailers with domestic containers.

IANA President & CEO Joni Casey told LM that based on third quarter volumes, it certainly seems as if capacity and fluidity are returning to the intermodal network.

“Quarterly volumes are still relatively muted, so it’s hard to tell if this will become the new norm especially given the lack of definitive peak season numbers,” she said.

With ISO containers topping domestic container volumes in the third quarter, Casey explained that is indicative of how intermodal volumes are very dependent on imports.

“As conditions at the ports and marine terminals improve, and, assuming that the dollar stays higher, international traffic should continue to increase,” she said. “Transloading can offset international gains to some extent, but this segment typically is higher than domestic moves.”

And with many retailers indicating inventory levels for the holidays are where they need to be she said that existing inventory levels may impact international volumes, but the year-over-year comparisons still support growth in Q4 and Q1.  But she said that comes with a caveat, in that it is becoming harder to predict however, given externalities such as global inflation and possible recession, and the impacts of the Ukrainian war.

Looking at trailer volume, Casey observed that the trend away from trailers towards domestic containers is likely irreversible.

“However, we may see instances when intermodal trailer use spikes based on equipment shortages and increases in e-commerce as we have in the past,” she pointed out.

On a year-to-date basis, through the first three quarters of 2022, IANA reported that total volume—at 13,479,140 units—is down 4.0% annually. Trailers—at 708,887—are down 21.8%, and domestic containers—at 6,157,478—are up 3.6%. All domestic equipment squeezed out a 0.2% increase, to 6,866,365, and ISO containers fell 8.0%, to 6,612,775.