All aboard! Over the past decade, intermodal (rail) shipping has become increasingly popular as a cost-effective and environmentally-friendly alternative to truckload shipping. Typically, rates for intermodal shipments will be lower than those for truckload shipments, and with modern supply chain challenges, like tightening capacity on America’s highways and the truck driver shortage, many shippers are finding rail to be a better overall solution.
In 2015, U.S. rail intermodal volume hit 13.7 million containers and trailers, breaking the previous record set in 2014, according to the Association of American Railroads.
Recent forecasts from the Federal Highway Administration find that by the year 2045, total U.S. freight shipments will rise about 40 percent, from an estimated 18.1 billion tons in 2015 to 25.3 billion tons. As this growth trend continues, with decreasing highway capacity and other factors making it harder to meet the demand via truckload, intermodal has a potential to play a much larger role in future freight transportation.
Since 2010, intermodal shipping has shown significant growth until coming to a halt in the second quarter of 2016, according to statistics from the Intermodal Association of North America. Overall intermodal traffic recorded its first volume decline in Q2 after 25 consecutive quarters of growth.
According to IANA’s latest quarterly Intermodal Market Trends and Statistics report, trailer volumes were down 28.6 percent and international shipments dropped 9.3 percent in Q2 of 2016. Domestic container loads saw growth, up 3.4 percent, making the overall decline in intermodal traffic 6.1 percent.
Each of the seven highest-density trade corridors, accounting for 63.4 percent of the total intermodal volume, also saw a loss in Q2 of 2016. The Midwest to Southwest corridor saw a 5.5 percent decline, Northeast to Midwest declined 1.6 percent, the South Central to Southwest corridor saw the biggest loss, down 17.6 percent in the second quarter, East Central to Western Central declined 4.2 percent, Midwest to Northwest declined 4.1 percent, and Southeast to Southeast declined 2.9 percent in Q2 2016.
“The Q2 intermodal volume numbers reflected current market conditions,” said Joni Casey, president and CEO of IANA. “Year-end projections are still tracking for growth in both the domestic container and international volumes, however.”
For shippers, less traffic on the rails means more available capacity and less competition for competitive rates. If you’ve been on the fence about shipping intermodal, now would be a great time to explore the option.
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