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. That rate, which has been grinding upward since a bottom in March, ripped to the upside beginning in June. On May 29, shippers in China were booking spot containership capacity for $1,647 per FEU; yesterday that rate reached $2,154.

At the same time that steamship lines are reaping the benefits of the capacity adjustments they imposed on trans-Pacific services over the past few months, air travel is still quite limited and, if the Trump Administration gets its way, will be acutely challenged in the future. There’s a possibility that high-value freight will undergo a mode shift from air to ocean, and that demand for intermodal spot freight increases, especially given current tightness in Los Angeles trucking markets.

One question that we think remains unresolved so far is the shape of this fall’s peak season for ocean freight. Containers carrying retail goods to stock stores ahead of the holiday shopping season tend to peak at U.S. ports in August and September. We may see more of a steady build-up to that point, or a more pronounced peak, especially if shippers are worried about trade relations or capacity in trucking and air.

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