The North American intermodal freight market has shown promising growth in recent quarters, yet industry experts caution that underlying challenges may temper optimism about a full recovery. New data reveals both opportunities and vulnerabilities in this critical transportation sector.
Understanding Intermodal Transportation
Intermodal freight transport combines multiple transportation modes—typically rail, truck, and sea—to move goods efficiently across long distances. This method offers significant advantages over single-mode shipping by balancing cost, speed, and environmental impact.
"Intermodal represents the optimal intersection of economic and operational efficiency," explains a transportation analyst. "By leveraging each mode's strengths, shippers can reduce costs by 15-20% compared to truckload shipping while maintaining reliable service."
Q2 Growth: Surface Gains and Structural Concerns
The Intermodal Association of North America (IANA) reports a 4.5% year-over-year increase in Q2 volumes, reaching 4,462,604 shipments—the strongest growth in three years. However, this follows a 6.5% decline during the same period in 2016, suggesting the recovery remains fragile.
International container shipments led the growth at 5.6%, with Canadian routes showing particular strength at 13.2% expansion. Domestic containers grew 3.2%, while trailer volumes increased 3.9%.
IANA President Joni Casey notes, "While international volumes are recovering, they haven't kept pace with container import growth. The coming peak season will be crucial for assessing sustainable momentum."
Market Dynamics: Competing Modes and Regulatory Factors
The trucking sector's unexpected 24.8% revenue surge presents both competition and opportunity for intermodal providers. Truckload rates have risen amid capacity constraints, making intermodal more attractive for cost-sensitive shippers.
Upcoming Electronic Logging Device (ELD) regulations, taking effect December 2017, may further tighten truck capacity. "The ELD mandate's full impact remains uncertain," Casey observes. "Any significant reduction in truck availability could drive additional intermodal conversion."
Growth Drivers and Risk Factors
Several macroeconomic factors support continued intermodal expansion:
- Strengthening consumer spending and industrial production
- Railroad service improvements reducing transit times
- Environmental advantages in an era of sustainability focus
Potential headwinds include:
- Trade policy uncertainties affecting international volumes
- Potential economic slowdown reducing freight demand
- Infrastructure limitations at key intermodal terminals
Strategic Considerations for Shippers
Industry experts recommend that logistics managers:
- Conduct network analyses to identify optimal intermodal conversion opportunities
- Develop relationships with multiple intermodal marketing companies (IMCs)
- Implement tracking technologies to maintain shipment visibility
- Monitor regulatory changes affecting transportation capacity
As the transportation landscape evolves, intermodal's ability to combine efficiency, reliability, and sustainability positions it for long-term growth—provided it can navigate current market complexities.