Intermodal Traffic Slump Seen as Continuing

Three intermodal traffic analysts predicted this week that intermodal freight volumes will remain depressed for the remainder of this year.

The analysts cited a host of factors including the trade war between the United States and China and a slowing economy.

Melissa Peralta, senior manager of economic planning for TTX, said the slowing economy can be traced to the tariffs that the U.S. and Chinese governments have placed on imported goods.

She noted that retailers and others sought to beat the tariffs by increasing their imports before they went into effect.

As a result, inventories are higher than normal and imports from China have fallen.

Overall intermodal volume has fallen by 2.7 percent in the first half of 2019 and analysts expect it to remain below last year’s levels for the full year.

International volumes, which had increased 0.6 percent through June 30, are expected to be flat for the rest of the year.

Domestic intermodal traffic is down 6 percent and is expected to continue shrinking.

Peter Wolff, director of market development at TTX, noted that international volume at West Coast ports is down 1.8 percent this year while the volume at East Coast ports has risen 8.1 percent.

That is significant, he said, because cargo that lands on the West Coast has a 70 percent chance of moving inland via rail while freight landing at East Coast ports has only a 20 percent chance of moving to its destination via rail.

Woff said the the shorter hauls in the East make rail moves less competitive with truck transport.

The analysts said that much of the decline in cargo landing at West Coast ports is due to a decline in imports from China.

Traffic landing at East Coast ports has benefited from increased imports from countries in southern Asia, which tend to take an all-water route via the Suez Canal.

Another factor in increasing East Coast cargo is an expanded Panama Canal and the desire of shippers to diversify their supply chains.

Increased capacity in the trucking industry combined with railroads reducing their number of intermodal service lanes has contributed to falling domestic intermodal movements by rail.

John Woodcock, director of market development at TTX, expects domestic container volume to remain in the doldrums even during the traditional fall peak shipping season.

“We certainly don’t expect a sudden rebound,” he said.

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