All aboard! Intermodal (rail) shipping is a popular mode of transportation as it’s a cost-effective and greener alternative to truckload. Typically, rates for intermodal shipments will be lower than those for truckload shipments. With modern supply chain challenges, like tightening capacity on America’s highways and driver shortage, many shippers find intermodal to be a good transportation solution to have available. However, 2020 threw a curveball for many industries and modes of transportation, intermodal included. Here’s a breakdown of recent intermodal market trends and what you can expect currently.
Recent high levels of congestion at ports are causing service disruptions for intermodal providers. Port congestion is causing havoc on drayage and door-to-door intermodal. With the surplus of imports coming in from the backlog caused by Covid-19 and increased volume, chassis shortages and terminal congestion it’s having a negative effect on capacity – especially on the West Coast.
Delays in shipments and restrictions are being put in place by several intermodal providers. The congestion is being caused by the rapid increase in online sales and e-commerce, as well as other reasons such as labor disruptions, equipment shortages, and more. Retailers are also having to continuously restock because of the increase in sales. Typically, during the holiday season, there is a slowdown, but that didn’t happen in 2020.
Intermodal has consistently been moving since September 2020, with intermodal traffic being up 11 percent year-over-year in the past month. This is resulting in delays. Truck drivers are experiencing up to nine hours of wait time to pick up a container while shippers are seeing shipments delivered weeks late.
According to the Surface Transportation Board, November of 2020 had the lowest employee numbers of U.S. operations of Class I railroads since 2012. Year-over-year, employee headcount is down 13.7 percent since 2019 and down 1.58 percent since just October. With intermodal volume increasing and employees decreasing, capacity continues to be strained and rates remain high.
As consumers have continued to increase their online spending, companies are consistently needing to replenish their inventories. This looks to continue throughout the first half of 2021. Due to the recent stimulus and the vaccine coming into play, manufacturers are looking to put products back on shelves as consumers hopefully look to spending more in person again versus online. Regardless, freight volumes are expected to continue to remain elevated.
The intermodal sector closed 2020 with the closest numbers to pre-pandemic levels that they have been due to the heightened freight volumes. Capacity is looking to begin to loosen a bit for door-to-door intermodal across many markets. Rates are also looking to fall, currently down 4.2 percent the week prior as of January 5th. However, they still remain 6.7 percent higher from 90 days ago and up 79.3percent from a year ago. 2021 will hopefully bring us closer to the pre-pandemic volumes, capacity, and rates we used to know, but we certainly have quite a ways to go before that. Buckle in because it looks to continue to be a wild ride.
Luckily for you, we have a Team of experts here to help you no matter the current intermodal market conditions. For more information about our intermodal services or to get a quote,
Author: Christine Morris
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