The North American intermodal market presents a complex picture of contrasting trends, with international and domestic sectors moving in opposite directions. Industry expert Larry Gross, president of Gross Transportation Consulting, recently delivered a comprehensive analysis at the RailTrends conference in New York, shedding light on these dynamics and their implications for stakeholders.
Diverging Paths: International vs. Domestic Markets
International Intermodal: The Tariff-Driven Rollercoaster
The international intermodal sector has experienced significant volatility, largely driven by tariff policies. An early-year surge in shipments—termed the "pull-forward" effect—occurred as shippers rushed to move goods ahead of anticipated tariff increases. However, this artificial demand spike was followed by a sharp decline as the market corrected.
Key strategies for navigating this volatility include:
- Implementing flexible capacity planning to respond to sudden demand shifts
- Diversifying market exposure to mitigate concentration risks
- Enhancing service quality to maintain competitiveness during downturns
Domestic Intermodal: Steady Seasonal Growth
In contrast to the international sector's turbulence, domestic intermodal has shown consistent growth since June, benefiting from typical seasonal patterns. Agricultural harvests, holiday retail activity, and e-commerce promotions have all contributed to this stability.
Opportunities in domestic intermodal include:
- Optimizing route networks to improve efficiency and reduce costs
- Strengthening partnerships across rail, trucking, and port operators
- Capitalizing on seasonal demand patterns through proactive planning
Cross-Border Dynamics: Varying Performance Across North America
U.S.-Canada Trade: Policy-Sensitive Flows
Cross-border movements between the U.S. and Canada remain highly responsive to tariff policies, requiring close monitoring of regulatory changes and adaptive strategies to maintain trade flows.
U.S.-Mexico Trade: Sustained Expansion
The U.S.-Mexico corridor continues its strong growth trajectory, fueled by Mexico's expanding manufacturing sector and increasing exports to the U.S. market. This presents opportunities for infrastructure investment and service development.
Structural Challenges and Future Outlook
Beyond cyclical fluctuations, the intermodal sector faces deeper structural issues:
- Market share has stagnated at approximately 6% of long-haul truck freight since 2016
- Growth rates have lagged behind overall GDP expansion
- The industry remains overly dependent on import volumes
Domestic Intermodal as the Growth Engine
Gross identifies domestic intermodal as the primary avenue for market share recovery. Performance varies significantly by route length, with single-line western corridors outperforming multi-rail eastern routes. Potential solutions include:
- Improving coordination between railroads on shared corridors
- Optimizing terminal operations to reduce transit times
- Developing competitive pricing structures for intermediate-length hauls
External Factors Shaping the Market
Several external variables could influence intermodal performance:
- Global shipping route changes, particularly regarding Red Sea and Suez Canal access
- Trucking capacity dynamics and driver availability
- Ongoing trade policy uncertainties with China and Canada
Projected Trends Through 2026
Looking ahead, the market faces several headwinds:
- Peak season timing has shifted earlier in 2025 compared to historical patterns
- International volumes are expected to remain under pressure
- Truckload demand shows little sign of near-term improvement
- Overall freight volumes may remain flat or decline slightly in 2026
The intermodal sector stands at a crossroads, requiring strategic adaptation to overcome structural challenges and capitalize on emerging opportunities in North America's evolving freight transportation landscape.