Domestic container surge continues to spur North American intermodal traffic

By Jeff Stagl, Managing Editor

North American intermodal volume posted a healthy year-over-year gain in the third quarter primarily because domestic container traffic once again led the charge. Domestic volume jumped 9.4 percent to 1,557,084 containers, helping to pump up overall intermodal volume 4.7 percent to 4,010,582 units compared with third-quarter 2012’s total.

The domestic segment now has registered growth for the past 10 quarters. The buzzword for domestic container traffic is “consistency,” since it has logged steady gains for quite some time, says Joni Casey, president and chief executive officer of the Intermodal Association of North America (IANA), which released third-quarter traffic statistics on Oct. 31. More conversions of freight shipments from highway to rail/intermodal are a main reason, she says.

“The word is out on intermodal’s economics,” says Casey. “More [shippers] are test driving it.”

New trucking hours-of-service regulations that took effect July 1 also might have helped spur domestic volume a tad. A “34-hour restart” provision prevented truck drivers who had logged that many hours in a week from picking up loads in yards on weekends, says Casey. Major trucking firm Schneider National Inc. has projected a 3 percent to 4 percent reduction in productivity due to the regs, and is dealing with a heightened need to hire more drivers to move the same amount of freight, she says.

“We’re not sure if there was an impact from the regulations,” says Casey. “I think we will know more in six to eight to 12 months after the enactment.”

In addition to the big bump from container moves, domestic traffic was spurred in 3Q by a 1.2 percent gain in trailer volume, which totaled 411,659 units, according to IANA stats. Trailer counts increased in each of the quarter’s three months, reversing three years of decline and helping total domestic volume climb 7.6 percent to 1,968,743 units.

It’s difficult to pinpoint an exact driver, but there’s speculation the trailer gain might reveal a decrease in conversions of domestic intermodal freight from trailers to containers, indicate specific shippers’ preferences or reflect the initiation of new niche markets, says Casey.
 
“Regional trailer volumes seem to support the latter. The largest increases in trailer shipments were to and from the Northeast Region, followed by the Eastern Canadian Region,” she says.

The Midwest Region continued to account for the largest percentage of overall North American volume, at 28 percent. A lot of goods still are produced in the region, prompting many originating shipments, says Casey.

The Southeast Region registered the biggest year-over-year gain at 11.3 percent  —68 percent of the region’s total volume is domestic and north-to-south movements along major rail corridors bring a lot of freight to the area, she says.

On the international side of the volume equation, ISO container growth returned in 3Q, with volume rising 2 percent to 2,041,839 units largely because of increasing imports.

Despite that gain, something occurred in 3Q that hasn’t happened before: Seasonally adjusted domestic shipments exceeded international shipments. The milestone was achieved — after a decade of improving domestic service and five years of accelerated domestic traffic gains — because international container trade volumes were weak during the recession and since have faced an inconsistent rebound, says Casey.

Fall peak not a factor
With a strong third quarter in the books, IANA now projects the year will end with a relatively promising fourth quarter. The Oct. 1-17 government shutdown might have had a minimal effect on intermodal volumes, but other factors so far have been favorable, says Casey.

One annual 4Q event that used to be a major concern no longer factors in: the fall peak. The September-through-December period, when retailers load up on goods for the holiday shopping season, doesn’t cause volume spikes like it used to and has been tempered the past three to four years, says Casey. Plus, intermodal isn’t viewed as an overflow transportation option by shippers anymore.

“It’s a mainstream service now,” says Casey.

If the fourth quarter is as good as expected, IANA anticipates the following full-year outcomes versus 2012 levels: 3 percent to 5 percent growth for total intermodal volume, 5 percent to 7 percent growth for domestic volume, and 1 percent to 3 percent growth for international volume.

Next year, the association is projecting overall moderate volume growth. There are several issues that could impact intermodal traffic, such as the economy’s performance, says Casey.

“The government also needs to resolve the debt ceiling. It impacts consumer spending,” she says.

In addition, a potential International Longshore and Warehouse Union labor action next year could cause disruptions at West Coast ports and a bill in Congress might suspend the 34-hour restart provision in the hours-of-service regs, says Casey.

“Roll it all together and there are several issues that could impact volumes,” she says. “We’ll just have to wait and see.”