Intermodal providers

If history is any indication, it is unlikely intermodal providers will be able to implement a rate increase in 2024 contracts until the trucking market rebounds.

The Class I railroad said it and Florida East Coast Railway are looking to take more trucks off the road with the additional intermodal service offering.

A muted peak and post-peak season for imports and intermodal activity has shippers and service providers eyeing a freight rebound no earlier than late 2024.

The division of BNSF Logistics between BNSF Railway and J.B. Hunt is aimed at helping to improve service to joint customers at a time when freight demand is weak.

Railroads told the IANA conference they have made important operational changes that will translate into reliable service when demand picks up, but some logistics companies are not convinced.

If the looming strike against the “big three” US automakers comes to pass, then domestic intermodal will surely take another big hit in an environment where there are certainly more downside risks than upside potential for the rest of 2023, writes analyst Larry Gross.

The intermodal provider’s CEO believes there will be a small peak season between now and early November despite data from the US Surface Transportation Board showing volumes are down compared with last year.

Since new services from CPKC and CN were launched in May, intermodal volume out of Mexico has surged more than 30% year over year through the end of July.

Schneider believes once demand picks up for rail transportation, the intermodal industry can return to pre-pandemic levels of productivity for containers.

Norfolk Southern’s launch of an appointment system for import boxes in Memphis has not been smooth, but the railroad hopes to learn from the problems to make the October rollout in Atlanta better.

Regardless of where demand for intermodal and truckload freight transport moves over the coming months, the industry holds the key to its destiny in its own hands, writes analyst Larry Gross. 

CN said it will take up to eight weeks to clear the cargo backlog at the ports of Vancouver and Prince Rupert as the industry waits to see if ILWU Canada’s rank and file will accept terms of the tentative deal reached last week.

That mismatch between container supply and demand has forced intermodal providers to stack boxes, with J.B. Hunt saying it parked about 18% of its container fleet in the first half of the year.

The link would offer an alternative to the Meridian Speedway that pre-merger Kansas City Southern and Norfolk Southern Railway have partnered on since 2006.

While demand for domestic rail freight in the UK grows, the network’s ability to handle the more complex smaller shipments has been criticized by cargo owners.

Tiger Cool Express was an innovator in the intermodal industry, one of the first to fully embrace containerized reefer intermodal when it began ramping up operations in late 2013.

Norfolk Southern is a step closer to consolidating its Michigan intermodal business at one site after receiving a grant from the state for improvements at the Livernois yard.

The railroad is reducing demurrage fees and restoring additional free time that was eliminated in the past two years as international intermodal volumes have fallen sharply from East Coast ports.

Union Pacific’s launch of direct intermodal service from Houston comes two weeks after competitor BNSF announced it would begin a new service from the port’s Barbours Cut marine terminal.

As shippers scramble to shed unwanted inventory, more than 80% responding to a Journal of Commerce survey reported that they’ve kept 53-foot domestic containers for too long, incurring detention fees.

A “perfect storm” of poor schedule reliability, persistently high electricity prices, weak demand and cheaper diesel for trucking continues to undermine Europe’s rail-dominated combined transport sector.

Customers were largely satisfied with intermodal service in early 2023, citing CSX and J. B. Hunt as the top overall providers in North America, according to a Journal of Commerce biannual survey.

The railroad will start a twice-weekly service to Dallas and once-weekly service to Denver, but no ocean carrier as yet is offering inland moves from Houston.

One might expect that Western Canadian ports have benefited from cargo bound for the US Midwest being diverted from the US West Coast to avoid potential labor disruption, but that has not been the case, notes analyst Larry Gross.

Jones Act carrier Crowley will offer a new international container service from Mexico’s Gulf Coast into Mobile that will use Canadian National for inland reach to the US Midwest and Canada.

New York-New Jersey port truckers who worked five days per week last year are now down to about half that amount, sending spot drayage rates well below levels seen in 2021 and 2022.

Norfolk Southern Railway will institute a mandatory appointment system for truckers handling ocean containers at its Memphis terminal and plans to expand the requirement to Atlanta before the end of the year.

Beyond the dynamics of the new partnerships, intermodal providers acknowledge that generating fresh cross-border business will be important for long-term growth to fill new containers, but only if the price is right.

CPKC signed a deal with Swift Intermodal for a new daily train between central Mexico and Chicago less than 24 hours after Union Pacific announced a partnership with Canadian National and Ferromex.

Schneider National has inked a multiyear partnership with CPKC on intermodal service between Mexico and the US Midwest, a move that will provide new options for shippers seeking a single train to move their north-south freight.

Some truckers think it is unfair that shippers incur demurrage on weekends when railroads are open and chassis locations are closed, but it’s a complex issue without an easy answer.

Intermodal providers began idling thousands of domestic containers when demand fell sharply in the first quarter, causing an equipment glut across the US.

Data shows there is significant room for growth in the Mexican intermodal market, something the joining of Canadian Pacific Railway and Kansas City Southern could help spur, writes analyst Larry Gross.

To reduce costs, FedEx’s system-wide network overhaul will create a stronger North American “ground-air” trucking network, including FedEx Freight, and increase its use of US intermodal rail, the company says.

The Port of New York and New Jersey aims to complete a project in the next two years designed to speed the movement of intermodal trains as other ports along the East Coast jockey for discretionary cargo.

Despite being prepared for divestiture, the performance of global forwarder DB Schenker is the only reason Deutsche Bahn group is profitable at present.

Intermodal providers say they are struggling to bring 53-foot containers into UP’s terminals in Chicago and nearby Joliet, causing delays of several days to move cargo to the West Coast.

The combined railroad has an opportunity to divert more than 64,000 truck shipments to intermodal rail, according to S&P Global, but that’s only the crest of a wave of US imports from Mexico. 

Chassis providers believe the equipment shortages that bogged down inland supply chains in 2021 and 2022 will soon no longer be an issue for shippers, allowing the industry to return to a more typical supply/demand balance.

It stands to reason that the more miles one spends on low-cost rail, the better the comparative economics versus truck should be, but that’s not what happens in the real world, writes analyst Larry Gross.