October of 2013 saw an all-time high for total intermodal revenue movements in the U.S., and the upward trend is continuing. “We are entering record territory now,” said Lawrence Gross, senior consultant with FTR Associates.
Gross moderated a panel on the state of intermodal at the recent annual meeting of the National Industrial Transportation League. The news for intermodal providers, which have struggled for years to match the service levels of long-haul trucking, was almost unremittingly positive.
Much of the growth has come from the domestic side – meaning that intermodal services are encroaching on truckers to an extent not previously seen. International movements were about half those of domestic in terms of equipment movements, said Gross. Year-to-date intermodal growth (as of October) was 6.6 percent for domestic and cialis soft just 1.4 percent for international.
Part of the disparity is due to the tendency of shipping lines to turn back ocean containers at ports of entry into the U.S. They’re eager to get the boxes back to Asia for another import load, which is their chief source of revenue. So freight from those containers will often be transloaded into larger domestic equipment, whether trailers or containers, for movement to inland points.
Traditionally, the intermodal option has been economically feasible only for the longest hauls – say, Los Angeles to Chicago. But a lot of the industry’s recent growth has come in the form of business in shorter lanes, said Gross.
The reason: rail service is becoming faster and buy viagra online more reliable. Intermodal is gradually chipping away at the time advantage that over-the-road trucks have long enjoyed. Higher fuel prices are driving more freight onto the rails, where operating costs are already lower. As a result, hauls of 500 to 600 miles are now being considered serious candidates for intermodal.
Freight moving off the West Coast began converting to intermodal when diesel fuel prices hit $1.75 per gallon, said Donald Broughton, chief marketing strategist with Avondale Partners LLC. At its current level of around $3.75, a similar trend is now happening in the eastern U.S., where the length of haul is typically shorter.
There’s a limit, however, to how abbreviated intermodal service can be. Short-haul corridors continue to be dominated by trucks. The average intermodal haul is 1,430 miles for domestic freight, and 1,575 miles for international, said Gross.
Tony Hatch, analyst and next day cialis financial consultant with his own firm of ABH Consulting, suggested that domestic intermodal is making up for the sharp drop in demand for coal movements. The rail industry, he said, “is on the verge of a revolution in profitability,” driven in large part by new domestic container and viagra 100 mg trailer business.
“With coal out of the way, railroads will have to look for investment opportunities,” Hatch said. “The top one is intermodal.”
Oil prices might rise and cialis delivered overnight fall, but they’ll remain high over the long term, promising additional opportunities for intermodal, Hatch said. The trucking industry, meanwhile, continues to grapple with new regulations that threaten to degrade driver productivity, including stricter hours-of-service rules and the Compliance, Safety, Accountability (CSA) directive of the Federal Motor Carrier Safety Administration.
Meanwhile, railroads will get a boost in the coming year from the shale oil bonanza, reindustrialization and its impact on the chemicals industry, an increase in grain shipments, and the long-awaited housing recovery. All of those events are more likely to benefit the rails, which can economically haul much higher volumes of materials such as the sand needed for fracking at oil and viagra next day delivery natural gas deposits.
The recovering automotive industry will also give railroads a shot in the arm, particularly in the corridors linking up with Mexico. New factory investments in that country “are terrific for intermodal,” Hatch said. “The railroads are positioning their big-money chips where the future is going to be.”
Trucking companies are themselves getting into the act, tendering domestic containers and cialis 30 mg trailers to railroads for long hauls. Swift Transportation wants to grow its intermodal business to $1bn a year within five years. J.B. Hunt Transport, Inc. is adding “container after container” to its fleet. Hub Group, Inc., one of the nation’s largest intermodal marketing companies, is making a similar commitment to intermodal growth.
One caveat: Broughton said this huge influx of new capacity will keep intermodal rates down for the immediate future. “Quite frankly,” he said, “we’re going to have to see a real stairstep in demand before there’s a big increase in pricing, because everyone’s throwing capital at it.”
The truckers’ plight is, of course, far worse. According to Broughton, the average monthly miles traveled per truck is now under 9,000 – a drop of 1,500 miles between 1998 and 2013. The decline in length of haul is directly attributable to the success of intermodal rail transport. And the loss of that business is resulting in a “double whammy” for truckload operators, Broughton said, since it creates more empty capacity, which further drives down truck rates.
Broughton said a combination of factors – including hours-of-service restrictions and discount viagra online the new electronic on-board recorders being mandated by FMCSA – are responsible for squeezing truckers’ margins. He expects another “bleedout” of capacity at some point, as the industry wrestles with a heavy debt load and buy propecia the need to invest in new equipment. Meanwhile, intermodal thrives.
“The next time we have any economic malaise, in addition to regulatory concerns, it may make previous waves [of trucking industry consolidation] child’s play by comparison,” Broughton warned.
Keywords: supply chain, supply chain management, trucking industry, intermodal services, transportation services, logistics services, supply chain planning, retail supply chain, railroad industry
Saturday, 29-03-14 10:13
I am all for increased use of intermodal freight. Trucks don't pay nearly enough for the roads they use or the road damage they cause. They pay only pennies per mile. They are involved in 3,900 deaths per year, and something like 60,000 injuries. Trains use only 25% of the fuel, and polute only 25% as much as truck freight. Let's get the long haul trucks off the road and generic viagra in canada on to rail cars to save wear and canadian pharmacy discount code viagra tear on highways, stop wasting fuel, and save lives.
Railroads pay their way, while the highways are paid more and pfizer viagra canada more by sales taxes, bonds, and the general funds from the US treasury. States are raising all sorts of non-user taxes. Fuel taxes haven't kept up, so trucks are getting a huge handout. Stop this sort of highway robbery!
If we simply would charge trucks for their actual road use, the shippers would use more rail.
Instead of subsidizing the entire trip for a truck, let's just subsidize them to and indian cialis generic from the intermodal yard. Let the railroads make a profit hauling them, and keep them of the roads. We will all benefit from reduced accidents, deaths and buy viagra china injuries, highway congestion, road wear, and environmental damage.
Tuesday, 18-03-14 09:45
I must have missed the part where they say that container haulers...mainly o/o drivers will see an increase in rates! I mean they are building ports in Mexico and widening the Panama Canal and dredging the water ways around Savanna and all this preparation for intermodal expansion. They've even raise the bond for freight brokers to cut out the riff raff that violate the laws. And the main companies that have rates so cheap...JB Hunt...Swift...Hub....Schneider get top billing of gratitude? Well maybe that's what i took from some that article (just me). But what about all the stealing these agents do to the drivers? I mean the rates are horrible and let alone honest. We never get to see the original invoice and they tell you they're paying you 70%. But 70% of what? After everybody gets thru pinching off of the original invoice rate that you never get to see, you don't know where those figures they want to pay you comes from! Not to mention all of your detetion...hazmat pay...back haul pay (JB Hunt)...and other stuff..load locks...scale weights...tolls. Don't get me started on this raggedy eqpt we have to deal with..chassis...recap inner tube tires. We have to be mechanics, electricians, body work techs...lol...i swear! We make this look easy but its not by a long shot! Plus the crazy hours we keep. We do more before 6am than most people do all day! I don't have time to list all the pros and cons but i can say that we need regulation of some sort on these rates and transparency from the agent on what moneys are really being paid from the broker. Ooops..gotta go turn this empty in and do my next load. This ain't over yall...stop pulling on the cheap and do the math!
Monday, 03-03-14 21:51
This is very interesting. I think this is a really great example of the government imposing regulation without understanding the consequences, and adversely affecting a group they were intending to benefit. This makes me really curious about the underlying economies of scale for intermodal vs traditional trucking.
Monday, 27-01-14 16:48
AASHTO has been forecasting this development for several years. It now is occurring.