Intermodal Freight Reaches Record Annual High With 21,000+ Containers

Intermodal Hits Annual High as Shippers Shift More Freight From Road to Rail

Loaded domestic intermodal container volumes reached a new annual high in late September, as shippers continued moving freight from over-the-road trucking to rail in search of lower transportation costs.

The seven-day moving average of loaded domestic intermodal containers reached 21,697 on Sunday, Sept. 28, according to FreightWaves data. The average remained elevated as the third quarter came to a close, with volumes running approximately 8% above the same period last year.

The increase reflects both normal seasonal strength and continued growth in domestic intermodal demand. Container volumes generally rise from August into September, but this year’s seasonal increase has occurred on top of a stronger year-over-year baseline.

For trucking companies and drivers, the trend is another sign that freight traditionally moved by highway is increasingly being evaluated for rail conversion, particularly on longer lanes where the cost difference is most significant.

Cost remains the main reason for conversion

FreightWaves’ Intermodal Contract Savings Index showed average savings of approximately 30.9% compared with truckload spot rates as of late September. The index had exceeded 33% in mid-August, but the remaining savings gap was still described as historically high.

Some lanes showed an even wider difference. Freight moving from Harrisburg, Pennsylvania, to Atlanta offered reported savings of about 43% when intermodal was compared with current spot truckload rates. Outbound California lanes serving Ohio showed savings of more than 42%.

Those differences can make rail an attractive option for shippers with freight that can tolerate longer transit times and the additional handling involved in an intermodal move. For highway carriers, the shift may reduce the amount of long-haul freight available on some lanes, while creating opportunities for drayage and shorter regional moves connected to rail terminals.

Intermodal service typically combines rail transportation for the long-haul portion with trucks handling pickup, delivery and terminal transfers. That structure means the growth in rail volume does not eliminate trucking’s role, but it can change where truck capacity is needed and how freight moves through a network.

Rail volumes continue to post annual gains

Surface Transportation Board data showed that average U.S. intermodal container and trailer originations increased 3.8% year over year in August. Through the first eight months of the year, year-to-date intermodal volumes were up 3.1%.

Data from the Association of American Railroads showed approximately 291,000 North American intermodal units moved during the week of Aug. 15, an increase of 2.7% from the same week a year earlier. Total North American intermodal volume was running about 5.1% higher year to date.

Intermodal spot rates also increased in August. The FreightWaves SONAR Intermodal Rates Index rose 10 cents from July to $1.81, putting the index 38 cents above its year-earlier level. Initially reported average intermodal contract rates increased as well, rising 15 cents month over month and 13 cents compared with August of the previous year.

The rate increases indicate that demand is strengthening, even as intermodal remains less expensive than truckload on many lanes. If volumes continue to grow, the cost advantage could narrow as rail capacity and service availability come under pressure.

More growth expected before Thanksgiving

A seasonally adjusted forecast points to another 4% increase in loaded domestic intermodal volumes heading into Thanksgiving. The projection is based on current trends and historical seasonal patterns, but it does not account for possible changes in economic conditions, service performance or pricing.

FreightWaves noted that each additional week of volume growth could tighten available intermodal capacity. That raises the possibility of higher intermodal rates during the fourth quarter.

Rail service has slowed somewhat over the past year as more freight has shifted onto the network. However, the available savings compared with truckload rates have so far remained large enough to keep shippers using intermodal.

For drivers, capacity changes may be felt differently depending on the market. Long-haul truckload carriers could face greater competition from rail on lanes where savings are especially wide. At the same time, rail growth can support demand for local and regional drayage work, including container moves between shippers, receivers, rail ramps and distribution centers.

International volumes remain below their summer peak

Domestic intermodal strength contrasts with a more moderate trend in international container volumes. The FreightWaves international intermodal index stood at 13,620, down from a high of roughly 15,000 in July.

The decline was attributed to importers moving shipments forward earlier in the year. As a result, the peak season has been more extended and less concentrated in a sharp late-summer surge. A similar pattern was observed in over-the-road freight volumes during that period.

Markets showing notable intermodal growth include Atlanta, Chicago, Dallas, Houston, Jacksonville, Laredo, Los Angeles and Toledo. The broader increase suggests that shippers are continuing to use rail as part of a strategy to manage transportation costs, address tighter long-haul trucking capacity and diversify their freight networks.

Domestic intermodal’s record moving average does not mean all truck freight is headed to rail. Transit requirements, terminal access, service reliability and the nature of the cargo still determine whether a shipment can be converted. But the combination of strong volumes and historically wide savings is making intermodal a more important factor in the freight market as the fourth quarter begins.