Intermodal volumes trend down again in the third quarter, reports IANA

Various familiar themes led to another quarter of intermodal volume declines, according to data recently issued by the Intermodal Association of North America (IANA).

In its quarterly “Market Trends” report, IANA reported that total third quarter volume––at 4,662,488––was off 3.7% annually, marking the fourth consecutive quarter of annual declines after a lengthy stretch of gains going back to the third quarter of 2016. The first quarter of 2019 was down 1.5% annually, following 4.7% and 4.2% annual gains from the third and fourth quarters of 2018, respectively. And second quarter volumes were off 3.8% annually.

Trailers––at 296,663––slipped 17.6% annually, again representing the largest annual quarterly decline by segment, and domestic containers––at 1,915,342––fell 4.9%. All domestic equipment––at 2,221,975––was down 6.8%. ISO (international containers)––at 2,450,493––were down 0.8%. 

As was the case in the second quarter, IANA observed that the factors influencing intermodal earlier in 2019 still remain intact, in the form of loosening truck capacity putting pressure on domestic intermodal, and changes in trade policy eating away at container volumes and subsequently international traffic.

What’s more, IANA noted that the third quarter’s 3.7% annual decline represented a slight improvement over the 3.8% annual decline in the second quarter, and the 6.8% domestic equipment decline was better than the second quarter’s 7.7% decline. The 0.8% ISO decline was flat compared to the second quarter.

Addressing the steep trailer decline, IANA pointed out that that this came against a very strong 2018 for the segment, with trailers up 12.1% in the third quarter of 2018, following an 8.1% gain in the third quarter of 2017.

In an interview, IANA President and CEO Joni Casey said that looser trucking capacity and less rate pressure are clearly impacting domestic intermodal.

“But there has been a slight tightening of over-the-road capacity in the last month, with related adjustments to pricing,” she said. “And carriers using AOBRDs Automatic On-Board Recording Devices have until Dec. 2019 to either modify their current systems to meet ELD specifications or transition to an ELD, so this could serve to further tighten trucking capacity.  Also predicted resolutions of trade issues would positively impact inland intermodal moves.”

When asked if the ongoing trade issues, specifically in regards to the U.S.-China trade war, will continue to impact ISO volumes, Casey said that is hard to tell, with the caveat that, at some point, the build up of inventories that occurred last year will be worked off and are going to need to be replenished.

In looking back at the first three quarters of 2019, Casey said the things, or factors, that stand out the most are increasing volatility in international shipments, accelerated declines in intermodal trailer volumes, and higher than expected capacity in the trucking segment.

Looking ahead, IANA said that should fourth quarter volumes improve, they would still be up against a difficult 2018 annual comparison, due to a pre-tariff surge at that time. And it added that other factors that could keep volumes down include significantly lower truck rates, extra truck capacity, and changes to railroads’ intermodal service.

As for 2020, IANA pointed to various factors that could bring the mode back to the right side of growth, including: potential trade deals, rising fuel prices post the IMO 2020 application, re-tightening truck capacity and railroads’ efforts to drive growth in 2020, as well as the strength of the U.S. economy, in the form of fewer trade wars and improved industrial production output.