The national average intermodal spot rate of $1.85 per mile fell by 1 cent (or 53 basis points [bps]) last week, continuing the multiweek slide off of highs as capacity loosened. Spot rates are not falling due to demand as Week 3 Class I intermodal volumes accelerated to 17.8% y/y growth (above the four-week moving average of 13.3% and last week’s 12.8%).
There are a lot of moving parts right now in the intermodal market due to the tight capacity, high demand and congestion at ports as we discuss later in the report.
In short, domestic headhaul eastbound rates out of LA are moving up again as the Class I rails prioritize contractual customers. This is a reversal from last week. Conditions are looser in Northern California. Westbound backhaul lanes (back to LA) are priced at a severe discount to try to balance container flows back to the West where they are needed. And, as we show, intermodal competitiveness with truckload varies by lane. Lastly, the Panama Spread fell this week but has widened back out over the past several weeks as severe congestion at West Coast ports incentivizes container flow to the East Coast. CSX is disproportionately benefiting from these dynamics as its intermodal volumes outpace the other Class I’s.
Intermodal capacity remains extremely tight by historical standards but slid 105 bps this week to 3.11% nationally as service levels improve. Intermodal tender rejections have been in the stratosphere compared to normalized historical levels (of ~1%) for seven months now.
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