Economic uncertainty and over-the-road capacity are the biggest challenges facing the intermodal industry in the coming year.
They cloud the outlook for consumer demand, pricing and trade flows, which in turn affect asset deployment and — in some extreme cases — company survival. Exacerbating these business issues are legislative and regulatory initiatives that threaten to increase overall transportation costs.
Fortunately for intermodal freight providers and their customers, the West Coast labor agreement was one question mark that was resolved in 2023. But negotiations around the East Coast contract, set to expire in 2024, is the next hurdle to overcome.
On the policy front, more disruptions could loom in terms of threats to the independent contractor business model, stricter clean truck and environmental mandates, unproven rail safety legislation and the federal government’s foray into regulating our commercial business. And moving into next year, transportation providers will face macro issues such as: Will goods consumption pick up? Are high interest rates here to stay? To what extent will production exit China, and where will it go? Initial responses to these questions have already had a range of business outcomes across transportation, from course corrections to layoffs to shuttering.
Despite these challenges to intermodal businesses, companies continue to invest in equipment, facilities, networks and technology. Rails are committing more to their lines and hubs; 3PLs are building out transloading facilities; ports can point to channel deepening, raised bridges and on-dock rail; and truckers and leasing companies have increased the supply of available containers and chassis.
While a large surge in freight seems unlikely in 2024, given industry headwinds, intermodal providers backed by these investments will be ready to provide consistent and reliable service to customers when demand returns to more “normal” seasonal flows.