DC Velocity - February 2016

QRecent surveys of shippers indicate that intermodal service providers will continue to gain market share from over-the-road carriers. How has the industry achieved that continuing success?

AThe reasons for highway diversions are multiple—in previous years, the higher cost of fuel was one factor (although not for the last 18-plus months). More recently, market share gains have been the result of continued and increased investment in intermodal facilities and infrastructure, a tightening in over-the-road capacity, and the impact of government regulations on driver productivity.

QHow will the industry sustain thatgrowth? ADriver productivity isn’t expect- ed to improve in the near term, so this, as well as expected tightening in over-the-road capacity, will continue to assist in highway conversions. And the railroads plan to make continued investments in their intermodal networks. Another key component to sustained growth is delivering consistent service to intermodal customers.

QWhat sorts of initiatives are IANA members undertaking to provide the service consistency that shippers require?

AAgain, I would say investment in the network, from a national/macro perspective, and more and better contingency planning for the types of issues, such as severe weather, that caused service disruptions in the past. I can’t speak to specific company strategies, as these are typically commercial issues.

QWhat do you see as the biggest challenges for the intermodal segment and how will the industry address them?

AThe industry’s biggest challenges include the following:

1. Driver recruitment and retention. The entire freight
industry is dealing with this issue. In terms of inter-
modal, improving a driver’s treatment at (shippers’
and receivers’) facilities and reducing the amount of
time spent in a queue and at a facility will go a long way
toward improving the productivity and earnings capabil-
ity of intermodal drivers.

2. Terminal congestion. The (use) of more technology and the continued formation of chassis pools as well as increased investment in terminal infrastructure should improve facility throughput and equipment utilization.

3. Economic uncertainty. The economic recovery has seen multiple fits and starts. Freight transportation growth is reliant on a strong economic base, and we just aren’t seeing consistent consumer spending that contributes to sustained economic growth. Lower gas prices haven’t really translated to increased purchasing, and the stronger dollar abroad is adversely impacting U.S. exports. However, up until recent months, international shipment volumes had sustained intermodal growth for 2015.

4. Government regulations. Rail reregulation seems to be an ever-pres-ent threat and while the new surface transportation reauthorization legislation did not include an increase to truck size and weight limits, this also remains a possibility, so the intermodal industry must remain vigilant in these areas. It’s difficult to know the long-term impact of new electronic logging device regulations on intermodal motor carriers, but there is speculation of additional reductions in driver productivity for the over-the-road market—which makes this issue a potential “good news/bad news” item for intermodal.

QWhat are your highest priorities on the regulatory front? AIn addition to those cited above, IANA is commit- ted to making sure that the funding provisions set forth in the FAST [Fixing America’s Surface Transpor-tation] Act will be used for the benefit of intermodal connectors and investment in intermodal facilities and infrastructure.