The North American intermodal market stands at a crossroads, facing significant challenges but also harboring substantial opportunities. As international trade tensions persist and global economic conditions fluctuate, the sector is undergoing profound transformation.
Diverging Trends: International Decline vs. Domestic Growth
Recent analysis from the RailTrends conference in New York reveals a stark contrast between international and domestic intermodal performance. Larry Gross, President of Gross Transportation Consulting and an intermodal expert, highlighted this dichotomy during his presentation.
"The significant decline in international business results from earlier tariff-driven pull-forward effects," Gross explained. "However, the domestic picture appears more positive. Since June, we've observed solid growth in domestic numbers - much of it representing typical seasonal activity."
This divergence creates what Gross describes as a "tale of two markets," where challenges in international shipping coexist with domestic opportunities.
Cross-Border Variations: Canada vs. Mexico
The cross-border intermodal landscape shows notable differences between northern and southern borders. While U.S.-Canada traffic has suffered from tariff impacts, U.S.-Mexico movements demonstrate robust growth.
"We're beginning to see normal seasonal intermodal patterns for the first time since 2019," Gross noted, suggesting a return to pre-pandemic market rhythms.
Shifting Peak Seasons and Future Projections
Gross forecasts that the 2025 intermodal peak season will arrive approximately four weeks earlier than historical norms, around week 35 compared to the traditional week 39 peak. This shift follows two years of delayed peaks in 2023 and 2024, largely influenced by tariff policies and pull-forward effects.
Looking ahead, U.S. domestic intermodal volumes may face year-over-year declines through late 2025 and into early 2026, presenting both challenges and opportunities for strategic planning.
The Domestic Battlefield: Intermodal vs. Trucking
"The arena where intermodal truly controls its destiny is the domestic market," Gross emphasized. "This represents the real battleground between intermodal and trucking."
Since 2016, intermodal's market share has steadily eroded in the U.S. long-haul dry van and refrigerated markets, declining from a 7% peak to approximately 6%. Brief recoveries have failed to establish sustainable growth momentum.
Structural Challenges and Long-Term Growth Constraints
The current three-year freight recession and post-pandemic trucking capacity glut merely surface deeper structural issues. Weak import growth, increasing service sector dominance, and rising short-haul demand all challenge intermodal development.
Compared to a decade ago, total intermodal volume has grown just 4-5%, highlighting chronic growth limitations that require strategic solutions beyond waiting for favorable market conditions.
The "Donut Hole" Effect and Efficiency Opportunities
Gross identifies significant potential in optimizing domestic intermodal networks, particularly addressing the "donut hole" effect where two-rail routes underperform single-rail corridors.
"If we could boost volume in the donut hole ranges to half the share levels seen in adjacent distance bands, we could achieve 25% volume growth," Gross projected, suggesting that mergers represent one potential solution among several.
External Factors and Market Uncertainties
Several external variables could significantly impact intermodal's trajectory:
Global Shipping Routes: Full reopening of Red Sea and Suez Canal routes could shift Asian imports to U.S. East Coast ports, potentially creating new intermodal opportunities.
Trucking Capacity: Regulatory changes affecting driver supply could tighten trucking capacity and raise rates, potentially benefiting intermodal.
Trade Policy: Ongoing uncertainties surround Section 301 tariffs and broader North American trade relations.
Additional considerations include Panama Canal restrictions, challenging year-over-year comparisons through 2026, and generally flat volume projections for the near future.
Strategic Imperatives for Market Recovery
Industry experts suggest several focus areas for intermodal recovery:
Network Optimization: Enhancing route efficiency through advanced analytics and infrastructure improvements.
Service Innovation: Developing specialized offerings like temperature-controlled and hazardous materials transport.
Technology Adoption: Implementing IoT, AI, and data analytics for real-time visibility and operational improvements.
Collaborative Models: Strengthening partnerships across transportation modes to create seamless intermodal solutions.
As the market continues to evolve, domestic intermodal appears positioned as the most promising avenue for sustainable growth in North America's transportation sector.