INTERMODAL FLEET GROWTH COULD EASE SHORTAGES

INTERMODAL FLEET GROWTH COULD EASE SHORTAGES

The extremely tight trailer and container supply could loosen up within 12 to 18 months if predictions of double-digit growth in the nation's intermodal fleet are realized, according to industry officials.

Leasing company, banking and carrier officials gathered in Nashville, Tenn., last week for the Intermodal Association of North America meeting said fleet additions during 1994 could reach 28,000 containers and trailers.However, there was wide disagreement over exactly how soon the recent container and trailer supply shortage - driven by record shipment volumes - would end.

Since the late 1980s, the fleet controlled by railroads and leasing companies hovered between 125,000 and 130,000 units, not counting motor carriers' units that entered intermodal service since 1990.

Fleet size remained steady because there was limited enthusiasm to make dramatic capacity increases to meet 5 percent to 7 percent annual shipment growth since intermodal service and equipment was seen as delivering a low return on investment.

But several factors, including driver and equipment shortages in the motor carrier industry, have led to a surge in intermodal traffic, which has allowed the railroads to increase their profit margins and lower their costs for such business.

Alan Messing, vice president of domestic intermodal for Transamerica Leasing, projected that 1994 would bring a 19 percent increase to 178,000 units from 150,000, including motor carrier equipment used in rail-truck service. Other association panelists pegged 1994 growth at between 14,000 and 20,000 boxes.

The profitability issue has been overcome, making fleet expansion possible, said David Walkup, president of Bay Cities Leasing.

Despite the additions, "the shortage will ease only slightly in 1994," said Mike Fox, XTRA Corp.'s vice president who oversees intermodal equipment. The leasing company executive said today's shortage will be transitory as long as carriers improve domestic container utilization and make planned

investments.

Alan Weiman, North American vice president for equipment lessor Genstar, said the shortage will end in 12 to 18 months as manufacturing capacity opens up and railroads and lessors resolve questions about whether to buy 48-foot or 53-foot containers with 107 or 110 inches of interior height.

The executives identified other questions that need to be resolved before a clear picture of the industry's future fleet can emerge. They include:

* How much more freight can bulging terminals handle?

* Can a workable domestic container be formed?

* Where will the debate over equipment standards lead?

* How many more intermodal trailers will be built?

Mr. Walkup said that "tremendous growth in the marketplace will mean competition for terminal capacity." That raises questions of whose boxes get handled first and whether terminals can handle freight expeditiously.

Others said a domestic container equipment pool available to everyone could emerge as soon as concerns about box management and control are overcome. Timetables for implementation were vague.

Another issue, potential competition between pool and rail-controlled equipment also will have to be dealt with once there is enough equipment to go around. During a shortage, questions about whose box will be picked to move freight is a non-starter.

To date, railroads acquiring domestic containers have controlled them in assigned service to boost utilization and return on investment.

"I don't think that (a container pool) will happen next year, because we haven't worked out the problems with trailers," said Steve Branscum, assistant vice president of equipment and hub operations for the Santa Fe Railway. "When we do, I think we'll see one."

"Piggyback (trailer) pools were a great idea, but they didn't include stewardship (responsibility to control the assets)," Mr. Weiman said.

Mr. Fox said problems could be solved by harnessing existing information through EDI and applying it to increase asset management.

Mr. Weiman said he believed hesitation about equipment specifications were being resolved as carriers and lessors bought thousands of 48-foot containers with 107-inch inside height to make that box the industry workhorse. The 53- foot container with 110-inch inside height appears to be headed for more specialized uses, he said.

There was consensus that the trailer fleet was rebounding, with modest growth expected in 1994 and beyond, continuing a reversal of long-term declines that ended in 1993 with an increase of from 95,000 to approximately 100,000 units. As recently as 1988, the rail-based trailer fleet had almost 125,000 units.