Intermodal markets: JBHT and KCS earnings on Friday

On Friday, we’ll hear third-quarter financial results from two important players in the intermodal industry: J.B. Hunt and Kansas City Southern (KCS). In our view, the most important issues at stake are the degree to which the respective management teams believe the COVID-juiced surge in intermodal volumes is sustainable into

By |October 14th, 2020|Intermodal, News, Rail|

Intermodal markets: Escape from LA

Another wave of rate and service volatility, the product of high volumes and tight capacity, will work its way through the country from its source in Southern California. Rates out of Los Angeles spiked as intermodal tender rejection rates, which only come into play during periods of serious disruption, are

By |October 9th, 2020|Intermodal, News, Rail|

Intermodal markets: Rolling strong into Q4

Intermodal volumes were still up mid-single digits in Week 39 (up 5.5% year-over-year), even as railroads raise prices on shippers and intermodal marketing companies and congestion at Southern Californian ports worsens.   Ocean bookings data, particularly on the trans-Pacific, indicates that imports will stay strong for at least the next

By |September 30th, 2020|Intermodal, News, Rail|

Intermodal markets: The trouble with service

Average intermodal train velocities improved by 1.2 mph compared to last week while dwell times were flat, but those numbers don’t capture the full reality of the service as experienced by shippers.   Railroads adjust equipment fleets, power and crew starts to maintain operating leverage in response to rising and

By |September 23rd, 2020|Intermodal, News, Rail|

Intermodal markets: Under pressure

U.S. Class I railroads have largely arrested declines in average intermodal train velocity and lengthening terminal dwell times, but they’re doing so by punishing shippers for tendering surge and spot volumes.    Union Pacific has imposed surcharges of $5,000 on spot intermodal containers outbound from California because previous rate hikes

By |September 2nd, 2020|Intermodal, News, Rail|

Intermodal markets: Volumes up 5% with room to run

Intermodal volumes for the U.S. Class Is were up 5% year-over-year in week 24, led by an 8.1% increase in Union Pacific volumes and 8% growth in CSX. Kansas City Southern’s intermodal volumes were up 12.8% year-over-year, but on a smaller base. (KSC moved 11,477 units versus UNP’s 77,457.)  

By |August 26th, 2020|Intermodal, Rail|

Intermodal Markets: Operating leverage first

Consider the fact that across Union Pacific, BNSF, CSX and Norfolk Southern, headcount was down 16.6% year-over-year in July (less negative than June’s -17.9%), yet last week intermodal volumes were up 1.9% year-over-year for the second week in a row.   In particular, the best intermodal volume growth has been

By |August 19th, 2020|Intermodal, Rail|

Intermodal markets: A test on the horizon

U.S. Class I intermodal volumes were down just 1.8% compared to 2019 last week as the industry benefits from growing imports and tight trucking capacity.   In general, intermodal service has held up fairly well, deteriorating only slightly as volumes have slowly ground upward toward par: Train velocities are still

By |August 5th, 2020|Intermodal, Rail|

Intermodal Markets: Another round of network redesigns

Intermodal volumes continued their slow recovery and moved closer to par. The Eastern railroads – CSX and Norfolk Southern (NSC) – were especially upbeat on their earnings calls regarding intermodal growth prospects against a backdrop of tightening trucking capacity and fewer ocean blank sailings.   One notable change to CSX’s

By |July 29th, 2020|Intermodal, Rail|

Intermodal markets: Building steam

There’s a reductive and naive story about intermodal in which it grew faster in the 1990s and 2000s and eventually reached a level of equilibrium. Shippers were moving as much freight by intermodal, which was slower and less responsive, as they wanted, and anyway the railroads didn’t want to let

By |July 22nd, 2020|Intermodal, Rail|

Intermodal markets: Can contract rates go higher?

By removing power and capacity from the tracks and restricting services over the past few years, railroads have positioned themselves to benefit from rapidly strengthening trucking markets and take price on contract freight, in our view.   In some cases — outbound Los Angeles — intermodal spot rates are higher

By |July 15th, 2020|Intermodal, Rail|

Intermodal markets: Volumes on track, service slips

Tight trucking capacity continues to boost intermodal volumes out of Southern California, where volumes have recovered to a much greater extent than in Chicago, New York/New Jersey, or Savannah, Georgia. Most of the blank sailings on the eastbound trans-Pacific lane are behind us; container volumes at West Coast ports should

By |July 1st, 2020|Intermodal, Rail|

Intermodal Markets: Volumes getting better and better

Intermodal volumes are bouncing back to the low levels of 2019, and U.S. Class I railroads are recovering faster than their neighbors to the north and south. We believe that intermodal volumes will continue to rise, especially on the West Coast, as the number of blank sailings scheduled diminishes going

By |June 24th, 2020|Intermodal, Rail|

Intermodal Markets: Starting to look cheap again

Intermodal volumes and rates are weak compared to 2019, which was weak compared to 2018. That fundamental picture hasn’t changed, but it now appears that activity in trucking markets is providing some lift to intermodal. Intermodal volumes last week were down just 7.3% year-over-year (y/y), substantially better than the four-week

By |June 17th, 2020|Intermodal, Rail|

Intermodal markets: L.A. turns up again

Intermodal volumes continue to outperform the trailing 4-week average, and there are a few reasons why we believe this trend will continue. First, shippers are running into capacity issues getting freight out of China, reflected in Freightos Baltic Index spot rates for 40’ containers from China to the West Coast.

By |June 10th, 2020|Intermodal, Rail|

Intermodal markets: grinding upward

Intermodal volumes continue to improve, down 10.6% year-over-year but beating the trailing four-week average as they have in prior weeks. But keep in mind that 2019 was a weak year for freight markets and a soft year for intermodal volumes: The mode is well into a multiyear volume decline that

By |June 3rd, 2020|Intermodal, Rail|