CSX’s Intermodal Trip Plan Performance rate fell to 87.4% from 94% in the second quarter. Trip Plan Performance refers to on-time rates against planned estimated times of arrival on a per-container (or carload) basis, and is therefore a more relevant, customer-centric service metric than dwell time or train velocity.

 

In J.B. Hunt’s earnings call last week, Intermodal chief Darren Field described a difficult operating environment plagued by labor shortages at rail terminals and warehouses that delayed equipment, degrading asset utilization. Coupled with higher purchased transportation costs and higher drayage costs, an intermodal provider will see operating income drop. 

 

Union Pacific reports Thursday morning and the management commentary on the call should provide further clarity into the situation at West Coast ports and UNP’s appetite to sustainably add back headcount and equipment to restore fluidity to its operations. The railroads want sub-60 operating ratios: their customers want capacity and service, even when volumes are high. We’re not sure those two goals can be achieved simultaneously.

 

After a week when the national average intermodal spot rate fell by 0.8% to $2.25/mile — a move that followed similar softness in truckload markets — we do expect upside volatility to return in November.

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