IANA data points to solid intermodal volume growth

Intermodal volumes through May are showing decent annual growth, according to data provided to LM by the Intermodal Association of North America (IANA).

Total units for the month of May were up 6.3% annually to 1,632,461. Trailers showed the largest annual percentage gain, rising 21.8% to 122,656. Domestic containers were up 6.2% to 686,519, and international, or ISO, containers were up 4.4% to 823,286.

Through the first five months of 2018, total intermodal volume is up 7% to 7,682,276. Domestic containers are up 6.4% to 3,225,684, and trailers are up 17.2% to 595,758. ISO containers are up 6.1% to 3,860,834.

These impressive numbers confirm the ongoing thesis that solid economic fundamentals, in tandem with steady demand, are driving strong volume-growth.

And it is especially impressive on the intermodal side, when one considers that U.S. intermodal unit volume continues to outpace U.S. rail carload data, according to data from the Association of American Railroads (AAR).

Other factors driving solid intermodal growth include still-tight truckload capacity, coupled with the ongoing driver shortage, with the trucking market also dealing with some crimped production, due to the December 2017 implementation of the Electronic Logging Devices (ELD) mandate for motor carriers.

What’s more, the volume gains for intermodal are coming at a time when the freight railroad sector is still dealing with less than optimal service but is still growing both intermodal volume and price, according to Tony Hatch, principal of New York-based ABH Consulting.

“The rails are able to provide capacity even if the service quality is not currently as high as it has been in the past,” he said. “It also has to do with truckers raising rates, fewer drivers, and fuel being up [for most of this year],” he said. “Imagine what it would be like with improved velocity and productivity, in terms of how much more business they would have picked up.”

Earlier this year, IANA noted that the pairing of decent economic conditions and “specific freight conditions” were key driving volume growth, adding that steady container imports also are key. And it also said that high energy prices and tightness in the trucking market translated into more freight moving via domestic intermodal.

IANA President and CEO Joni Casey told LM that there were several reasons for the strong intermodal performance, including:  overall strong economy; continued import growth; higher fuel prices; tight OTR capacity; and weak comparisons to lower 2017 volumes in some markets.

Addressing the ongoing trailer growth, Casey described it as a “byproduct of heavy e-commerce demand, but it is also a factor of tighter over-the-road capacity,” adding “it remains to be seen if this is ‘the new normal.’”

On the ISO side, IANA explained that rising container import volumes are the main reason for segment growth, adding that barring any sort of change to trade policy, that growth should remain intact in 2018, paced by solid economic fundamentals. But should large tariffs be applied to Chinese imports, IANA said it could have a “significant impact on ISO container volume,” which would be a cause for concern, as 47% of U.S. container volume originates in China.