Intermodal growth expected to continue while carload freight lags, forecasters say

Retail business drives upswing in container traffic, increased business at Southern California ports
Trains Industry Newsletter
Get a weekly roundup of the industry news you need.
By signing up you may also receive occasional reader surveys and special offers from Trains magazine. View our privacy policy.
BNSF_intermodal_Lassen
A BNSF intermodal train hustles through Hinsdale, Ill., on Aug. 21, 2020. Intermodal traffic has rebounded well from the COVID-19 pandemic, but carload traffic will be slower to recover, forecasters say.
TRAINS: David Lassen

BLOOMINGTON, Ind. — The coronavirus pandemic has caused fundamental shifts in the economy that will mute growth in railroad traffic over the next year, freight forecasters told a rail shipper webcast today.

Despite the fragile economic recovery that began in June as businesses and the auto industry reopened, “we are not even close to getting back to equilibrium,” says Eric Starks, CEO of FTR Transportation Intelligence.

The pandemic has created a great deal of economic uncertainty, and new unemployment claims remain high as the virus has spread to different regions of the U.S., Starks says. The economic downturn is likely to continue until a vaccine is developed and distributed, he says.

The need to replenish retail inventories has prompted a spike in trucking and domestic intermodal shipments, while relatively high industrial inventories mean carload volume is on a much slower recovery trajectory, says Todd Tranausky, FTR’s vice president of rail and intermodal.

Carload traffic — minus coal, petroleum products, and grain — remains down about 10% compared to last year.

“Unfortunately, in the carload markets I don’t have a lot of great news for you,” Tranausky says. “If you look at where our forecast is, we expect volumes in carload to continue to struggle, to continue to be weak, all the way through the first quarter of 2021. It’s going to be a very slow, very uneven slog back to growth in the carload sectors.”

The slow carload growth is partly due to very different trajectories for commodities such as metals, autos, lumber, and coal, he says.

Intermodal is a different story. “We’re back to full recovery,” Tranausky says. “We’re back above where we were before the pandemic.”

Domestic intermodal volume has bounced back as retailers look to restock their shelves and online distribution centers, Tranausky says. Also a factor: Tightening truck capacity has prompted some shippers to return to intermodal.

Trailer volume is running above its five-year average, which is significant because it’s a period that includes Norfolk Southern’s rationalization of nearly all of its Triple Crown RoadRailer network, Tranausky notes. Parcel shippers are using intermodal as a capacity relief valve, he notes.

Tranausky expects intermodal strength to continue through the traditional fall peak period.

Overall international intermodal volume has stabilized, but imports are increasing through the ports of Los Angeles and Long Beach. The ports have been losing market share for years to ports on the Gulf and East Coasts as shippers chose lower-cost all-water routes from Asia.

Now that trend is temporarily reversing as importers are routing freight through L.A./Long Beach in order to get goods to consumers faster, Tranausky says.

Starks and Tranausky spoke on a webcast hosted by the Midwest Association of Rail Shippers that was moderated by MARS President Stefan Loeb, who is Watco’s chief commercial officer.

Leave a Comment
Want to leave a comment?
Only registered members of TrainsMag.com are allowed to leave comments. Registration is FREE and only takes a couple minutes.

Login or Register now.
Please keep your feedback on-topic and respectful. Trains staffers reserve the right to edit or delete any comments.
0 COMMENTS
FREE DOWNLOAD

FREE DOWNLOAD

The Genesee & Wyoming 

Newsletter Sign-Up

By signing up you may also receive occasional reader surveys and special offers from Trains magazine.Please view our privacy policy
Subscribe Up To 58% off the newsstand price!
Subscribe To Trains Mag Today
+