North American intermodal volume had rare decline in November

North American intermodal volume had rare decline in November

North American intermodal volume in November shrank 1.9 percent year-over-year, a rarity for an industry that has experienced steady growth for years.

But it’s unclear how much of an impact U.S. port congestion and the deterioration of intermodal rail service had on the rare traffic dip. International intermodal volume fell 3.6 percent year-over-year last month, likely tied to West Coast port woes, while domestic intermodal traffic slipped 0.3 percent in the same period, according to Intermodal Association of North America.

“Recent port congestion issues and increased (over-the-road) traffic may have contributed tangentially to this slow down, but looking back during the second and third quarters, particularly in the second quarter, volumes were higher than in previous years,” IANA President and CEO Joni Casey told JOC.com.

The decline in intermodal traffic may have also resulted from shippers importing more cargo for the holiday season earlier than usual and in some cases before the U.S. West Coast longshore labor contract expired July 1. U.S. West Coast employers accuse the  International Longshore and Warehouse of engaging in slowdowns, exacerbating port congestion, amid contract talks. The PMA requested Federal mediation on Monday. The ILWU rejects those claims, saying near record volume, chassis dislocation and other factors are the real causes of port congestion.

Despite the year-over-year decline in November traffic, North American intermodal volume is on track to exceed last year’s count of 15.5 million loads, Casey said. In a report released in early November, IANA forecast North American intermodal volume to end the year more than 5 percent higher than in 2013.

In terms of domestic intermodal volume, the shipments of trailers in November declined 2 percent year-over-year, while domestic container volume inched up 0.1 percent compared to the period in 2013. Domestic container traffic has grown at a much higher pace in previous months, expanding 4.1 percent and 9.1 percent in October and September, respectively.

Domestic intermodal volume growth has consistently outpaced international intermodal traffic, but some rail analysts have warned that domestic traffic gains could slow if rail service issues persist as they have throughout 2014. Lending credence to this belief is that domestic intermodal volume in November shrank 0.3 percent year-over-year while U.S. truck tonnage rose 3.3 percent in the same period, according to American Trucking Association’s For-Hire Truck Tonnage Index, noted Larry Gross, a senior consultant at FTR Associates, freight transportation consulting and research firm.

Shippers told Wolfe Research in August and September that they scaled back the volume of freight they were converting from over-the-road trucking services to intermodal rails. With over-the-road truck rates rising, the big question headed into 2015 is whether shippers will stick with intermodal service even though it’s generally worse than what they received in mid-2013. As intermodal transport is generally “sticky” — in that shippers rarely move freight back to the highway from the rails, just like they are loathe to ship ocean goods via airfreight — the railroads still enjoy some cushion before shippers turn away from the rails.

Although average intermodal train speeds, a metric of rail performance, slipped last week, they have been generally improving in recent weeks, suggesting the railroads are making some headway. But the big test will likely be over the next few months as the railroads work to maintain better network fluidity in the face of cold weather than they did last time around. Mother Nature will have the final say.

Contact Mark Szakonyi at mszakonyi@joc.com and follow him on Twitter: @szakonyi_joc.