Picture this: bustling West Coast ports, massive ships unloading mountains of containers, with trucks and trains working tirelessly to transport goods inland. This scene accurately depicts the state of the US intermodal market at the beginning of the fourth quarter of 2023. Data from the Intermodal Association of North America (IANA) reveals the driving forces behind this growth: surging West Coast imports and resilient US consumer spending.
Intermodal Market Overview: Strong Start in October 2023
According to IANA data, US intermodal volumes maintained steady growth at the start of Q4 2023. Total intermodal units reached 1,649,394 in October, representing an 8.9% year-over-year increase, demonstrating underlying economic vitality. However, not all segments showed growth:
- Trailer Transport: The only declining segment, dropping 0.7% YoY to 53,261 units. This trend likely reflects market preference for more efficient container transport and trailers' declining competitiveness in long-haul shipping.
- Domestic Containers: Showed robust performance with 788,841 units, up 5.8% YoY, indicating US supply chains increasingly leverage container advantages for domestic demand.
- Total Domestic Equipment: Combined trailers and domestic containers reached 842,102 units, up 5.4% YoY, with growth slightly tempered by trailer declines.
- ISO Containers: The fastest-growing segment at 807,292 units (12.7% YoY growth), driven by West Coast import surges and strong consumer demand.
Year-to-Date Performance: January-October 2023
Cumulative data for the first ten months reveals clearer growth patterns:
- Total Intermodal: 15,038,002 units (8.8% YoY growth), showing overall market strength supporting economic growth.
- Trailers: 486,245 units (17.6% YoY decline), confirming trailers' shrinking market share.
- Domestic Containers: 7,014,912 units (4.9% YoY growth), reflecting their crucial role in domestic supply chains.
- Total Domestic Equipment: 7,501,157 units (3.1% YoY growth).
- ISO Containers: 7,536,845 units (15.2% YoY growth), highlighting global trade's significant impact.
Q3 Review: Continued Growth Momentum
IANA's quarterly report showed Q3 intermodal volumes grew 9.8% YoY to 4,627,631 units, marking four consecutive quarters of growth after eight quarters of decline.
- Domestic Containers: 2,167,091 units (6.0% YoY growth)
- Trailers: 142,661 units (11.0% YoY decline)
- Total Domestic Equipment: 2,309,752 units (4.7% YoY growth)
- ISO Containers: 2,317,879 units (15.4% YoY growth)
Key Growth Drivers: Consumer Spending and Economic Resilience
IANA noted US consumers maintained "positive spending patterns" in Q3, with retail sales growing 1.0% YoY - the highest quarterly growth rate since 2021's pandemic recovery. Despite manufacturing slowdowns and housing market challenges, the economy showed notable resilience.
Seasonal Patterns and West Coast Imports
IANA attributed growth to typical seasonal trends (peaking late summer before tapering) and West Coast import surges. Concerns about potential labor disruptions at East/Gulf Coast ports diverted freight to West Coast ports, boosting international container volumes.
Market Outlook: Challenges and Opportunities
IANA expects international intermodal growth to continue, though Q4 faces tougher YoY comparisons (projected 12.6% growth). Outgoing IANA President Joni Casey noted Q3's international growth stemmed from West Coast imports and labor uncertainty elsewhere. She expects strong international volumes through year-end.
Regarding brief East/Gulf Coast labor disruptions, Casey believes short-term impacts were negligible but warns Q4 might see additional growth due to lingering uncertainty. Q1 volumes will be affected by new labor agreements and Asian Lunar New Year.
With many experts suggesting the freight market is bottoming and trucking capacity remains excessive, Casey predicts tightening truck capacity will benefit intermodal, potentially occurring between Q2-Q3 2025.
Segment Analysis
Trailer Transport Decline
Trailers' shrinking share reflects container transport's growing advantages in efficiency, cost, and security for long-haul shipping, compounded by rail companies' increased container investments.
Domestic Container Stability
Steady domestic container growth shows US supply chains' growing reliance on containerized transport, particularly with e-commerce expansion and demand for faster deliveries.
International Container Volatility
Subject to global trade fluctuations from geopolitical risks, trade tensions, and recessions, international containers maintain long-term growth potential amid global economic expansion.
Future Trends
Key factors shaping intermodal's future include:
- Infrastructure: Government investments in rail, ports, and roads to improve efficiency and reduce costs.
- Technology: IoT, big data, and AI applications to enhance operations and customer experience.
- Sustainability: Rail's lower emissions supporting environmental goals.
- Policy: Government measures encouraging intermodal adoption.
Conclusion: Intermodal's Economic Role
The US intermodal market demonstrated robust 2023 growth, fueled by West Coast imports and consumer spending. With infrastructure improvements, technological innovation, and policy support, intermodal appears poised for continued expansion, though trailer declines and international volatility warrant monitoring.