Further evidence of truckers’ growing use of intermodal can be found
in the third-quarter numbers posted by the Intermodal Association of
North America. Domestic inter-
modal operations showed their
best quarterly results in more than four years, according to
IANA, up by 6. 7 percent over the third quarter last year. The
surge was led by a 10.5-percent jump in domestic container loadings and buttressed by small gains in trailer loadings.
Through September, domestic intermodal volume for both
trailers and containers rose 4. 7 percent from 2007 levels,
according to the group.
Although in the past, intermodal movements tended to
be long hauls, that’s quickly changing. Through the first
nine months of this year, intermodal loads transiting less
than 1,000 miles grew by 7 percent, twice the growth rate
reported for 1,000-mile plus lanes, IANA says. The “sweet
spots,” according to IANA, were in corridors between 700
and 1,000 miles; there, freight shipped in domestic equipment—predominantly 53-foot containers—grew by 9 percent through September. The IANA data underscore that
the real action in intermodal is now on the short to intermediate corridors, where in the past goods have generally
moved over the road via truckload carrier.
Hunt’s numbers bear that out. For example, while the
carrier’s total intermodal load count in 2008’s third quarter
rose 13 percent over the same quarter in 2007, volumes on
its Eastern regional network increased by more than 50 percent. Hunt’s typical intermodal movement remains a fairly
lengthy haul—the trucker says an average intermodal
movement in the quarter traveled 1,817 miles. However,
that’s down 5 percent from 1,913 miles in the same period
a year ago.
The company doesn’t see that trend reversing itself anytime soon. Intermodal’s length of haul “is going to continue to come down” as it has for over-the-road trucking, says
Hunt CFO Jerry Walton. Positioning both intermodal and
over-the-road services for shorter lengths of haul is “
certainly where the trucker is headed,” he said in an interview.
It’s a similar story over at Schneider Intermodal. Van Kirk
notes that his unit’s growth is skewed toward intermediate
hauls averaging 1,000 miles. Most of Schneider
Intermodal’s shorter-haul growth has come from business
converted from over-the-road trucking, he says. By contrast, longer-haul volume gains are largely driven by new
business.
“Our intermodal volume is
small, and we are still on the steep
slope of the learning curve, but we
are pleased with our progress,” said
Cliff Beckham, USA Truck’s president and CEO, in a statement.
An economic advantage
Carriers may be bullish on intermodal’s future, but analysts are
divided on whether intermodal can
sustain the momentum. Satish
Jindel, president of Pittsburgh-based SJ Consulting Group Inc.,
says intermodal gains last year were
sparked in part by soaring oil
prices, and oil’s dramatic reversal in
recent months will lessen intermodal’s appeal. However, intermodal growth is likely to be supported over the long term by concerns over a worsening domestic road infrastructure that
may force freight off the highways, Jindel adds.
Eric Starks, president of FTR Associates, a Houston-based
consultancy, says the sharp decline in diesel prices will
“remove a major tailwind behind the recent intermodal
conversion. We expect that any additional conversion [to
intermodal] will significantly slow down and likely pause
completely for the near term.” He notes, however, that intermodal will retain its current share of the market, including
recently added short-haul traffic.
Other experts say intermodal is poised for a period of
growth regardless of how oil prices behave.
“The wake-up call was when diesel prices hit $5 a gallon,”
says Charles Clowdis, managing director-North American
markets, trade & transportation advisory services for IHS
Global Insight Inc., a Lexington, Mass., consulting firm.
“But even if prices never reach those levels again, it won’t
change the dynamic. In intermodal, the industry has found
a system that works.”
Jindel notes that railroads are poised to deliver “better
transit times and on-time performance” in large part
through significant infrastructure improvements. As an
example, SJ Consulting cites a Norfolk Southern Corp. initiative to enable double-stack service between the port of
Portsmouth, Va., and Chicago by raising clearances at 28
tunnels and seven bridges. The $155 million project will
shave one day of transit time from intermodal service
between the East Coast and the Midwest when it’s completed in 2010, according to the firm.
NS’s East Coast rival, CSX Corp., has launched its own
intermodal expansion by creating double-stack clearances
linking Washington, D.C., and Northwest Ohio via
Pittsburgh; between North Carolina and Baltimore via
Washington; and between Wilmington and Charlotte, N.C.
The $700 million project is slated for completion in 2015.
Dray area
Yet the potential of those future projects does not hide the
reality that many short and intermediate traffic lanes are
still not ready for intermodal operations. The existing rail
infrastructure would not be able to support increases in
