Intermodal Rail growth from truck may be slowing after five years…
A report in the JOC suggests that U.S. shippers are finding it more and more difficult to rationalize shifting their cargo from highway to rail.
Why? Questionable service reliability and accelerating intermodal rates are to blame, according to intermodal analysts and a recent shipper survey.
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A few highlights from published sources:
A Wolfe Research survey of roughly 600 shippers, intermodal share gains have slowed to their lowest level in nearly five years.
In the first three months of 2015, shippers diverted 1.3 percent of their volumes from truck to rail, down nearly 19 percent quarter-over-quarter. On the flip side though, shippers moved 1.6 percent of their rail volumes to the highways during the last quarter.
The Wolfe Research found that this is the second straight quarter that shippers have indicated a net freight diversion from rail to truck, after four years of the exact reverse pattern.
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Over the past six months, the Cass Intermodal Price Index — a measure of “all-in” intermodal costs including rates and fuel surcharges — has risen more than 4 percent.
In the period, U.S. contract truckload rates rose only half that at ~ 2 percent, according to the Cass Truckload Linehaul Index.
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CSX Transportation reported total intermodal volumes were up only 1.2 percent year-over-year in its first quarter.
Norfolk Southern Railway, reported intermodal gains, up 5 percent. Further west,
BNSF Railway reported port congestion among other factors had pulled down its intermodal volume roughly 5.5 percent for the quarter.
Over the longer term, a number of experts still expect railroads “to take market share from trucks” is the conclusion from Wolfe Research in its latest report.
The railroads continue to aggressively invest capital to improve track capacity and deploy more train equipment and train crews.
BNSF, for example, has trumpeted reports of significantly improved intermodal service and performance metrics. According to BNSF, since the fourth quarter of 2014, BNSF intermodal has experienced overall improvement with velocity up 6 percent since the beginning of November and on-time performance up nearly 20 percent since the middle of that month.
Log onto the Journal of Commerce for their complete report.