intermodal demand on many of those
corridors, according to industry
observers.
“There are a zillion markets that will
never be intermodally competitive unless
the railroads or the government spends
money on infrastructure,” says John G.
Larkin, managing director, transportation
logistics group for the investment firm
Stifel, Nicolaus & Co.
Tom White, spokesman for the
Association of American Railroads, says
future intermodal growth “will depend on
whether there are capacity constraints in
individual corridors. Railroads are investing heavily in expansion aimed at intermodal, but it does take some time for
those projects to come on line.”
Truckers also will be under pressure to
better manage their drayage fleets to
ensure that loads can be promptly fed to
and from intermodal ramps while minimizing the dray that adds time and
expense to an intermodal move. “As the
length of haul declines, so too does the
‘economic radius’ around the rail ramp,”
Starks of FTR says. “Loads must originate
and/or terminate near the ramp in order
to minimize high-cost dray miles as a
percentage of the total door-to-door
move.” As a result, Starks predicts intermodal will be hard-pressed to compete
for shorter-haul loads outside high-den-sity traffic lanes usually located near rail
ramps.
Van Kirk of Schneider Intermodal says
the efficiency of drayage operations will
often determine whether the shipments
should go on a train or a truck. In what
may be an attempt to better control that
segment of the business, Hunt expanded
its in-house drayage fleet by 20 percent in
the third quarter of 2008 to reduce its
reliance on independent contractors.
Offsetting the increasing costs of dray
service as loads are staged farther from
main intermodal ramps may prove difficult, according to Larkin. “The longer the
dray, the quicker the economies [of intermodal] break down,” he says.
Challenges aside, there is little doubt
that for a trucking industry confronting
weak domestic and international
economies, a deteriorating infrastructure, oil price volatility, environmental
imperatives, and a demanding
clientele, intermodal will take on
increased importance.
In the process, companies that
made their living off the highways
may need to rethink their business
models. Those companies that have
successfully made the transition have
needed to adjust their culture. That
goes for firms whose names are virtually synonymous with trucking.
“J.B. Hunt himself might be
rolling over in his grave if he knew
that intermodal had become the
growth and profitability driver for
his company,” says Clowdis.
