Market Overview

Intermodal Growth Fuels US Traffic Volume Gains

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Intermodal Growth Fuels US Traffic Volume Gains

E-commerce, the restocking of inventories and tighter truck capacity were among the factors that boosted U.S. intermodal volumes in October and the third quarter.

"Inventory replenishment and increasing e-commerce activity, along with some capacity constraints on the trucking side, have helped intermodal to turn the corner this quarter," said Joni Casey, president and CEO of the Intermodal Association of North America (IANA). Casey was referring to North American intermodal volumes in the third quarter of 2020. "This trend is expected to continue, but dependent on the ongoing impacts of COVID-19."

U.S. intermodal traffic in October rose 10% to 1.17 million intermodal containers and trailers, according to the Association of American Railroads (AAR).

In contrast, U.S. carloads were 6.6% lower year-over-year in October to 912,772 carloads. Excluding coal carloads, which represented roughly a quarter of U.S. carload volume in 2020, carloads were down by only 1.2% year-over-year.

"Thanks largely to rising imports and inventory restocking in preparation for the holidays, October was the best month ever for U.S. rail intermodal, with volumes up by a third from April of this year. That's a stunning increase in six months," said AAR Senior Vice President John T. Gray. 

He continued, "Meanwhile, U.S. rail carloads rose in October for 10 of the 20 carload categories we track, the most since the pandemic began. Carloads of grain in October were their highest in 13 years, while carloads of motor vehicles and parts have recovered after falling close to 90% earlier this year. Changes in energy markets continue to pressure carloads of coal, petroleum products, and frac sand and holding back total carloads. Excluding those three categories, carloads in October were a few percentage points higher than last year."

Meanwhile, intermodal traffic boosted overall U.S. rail volumes to 2.08 million carloads and intermodal units, a 2% increase from October 2019.


A comparison of U.S. carloads over the past year, graphed on a relative basis. Blue indicates total U.S. carloads (RTOTC.USA), green is coal (RTOCO.USA), orange is grain (RTOGR.USA), purple is nonmetallic minerals (RTONM.USA), and yellow is motor vehicles and parts (RTOMV.USA). (FreightWaves SONAR)

Domestic intermodal activity boosts North American intermodal traffic 

October's rising intermodal volumes helped to support higher volumes for the third quarter, according to IANA. Of the overall intermodal traffic, domestic containers and trailers rose 9.8% while intermodal shipments fell 6.5%.

Combined volumes of the intermodal marketing companies were up 8.6% in the third quarter while highway and intermodal loads grew by 7.7% and 10.1%, respectively.

Volumes within the seven highest-density trade corridors were up 1.9%, with Midwest-Southwest and the Northeast-Midwest corridors up 6.6% and the South Central-Southwest corridor up by 4.9%. The other four quarters showed year-over-year decreases.

In IANA's Intermodal Quarterly for the third quarter, IANA said intermodal volumes are expected to rise at a moderate pace in the fourth quarter, with domestic containers potentially rising somewhere between 2% and 4%. 

But the uncertainties related to the COVID-19 pandemic make it harder to forecast, IANA said.


U.S. rail carloads (blue: RTOTC.USA), intermodal trailers (orange: RTOIT.CLASSI) and containers (green: RTOIC.CLASSI) over the past year. (FreightWaves SONAR)

The pace of intermodal growth in the fourth quarter

One concern that some rail stakeholders have expressed is whether the railroads will have enough capacity available as volumes, including intermodal traffic, continue to rebound in the fourth quarter. The railroads insist that they're taking steps to ensure they meet customer needs, according to executive comments during the third-quarter earnings season.

But what's compounding this year's peak retail season are upstream and downstream capacity constraints. Ocean container volumes continue to push boxes into the ports, where the railroads pick them up at rail ramps. Meanwhile, retailers are seeking to restock and replenish inventories, and so they need adequate transportation capacity inland to receive orders. 

As a result, the retail peak could last longer this year than in past years, with rail under pressure at both ends, according to a Wednesday note from FreightWaves Passport Research.

"There still appears to be a significant gap between the restored network fluidity cited by some railroads and the ease with which their customers can secure equipment and move their freight," said Tony Mulvey, FreightWaves Passport research associate in the note. "It's ultimately not surprising, given how a high-volume environment (U.S. intermodal volumes up 10.8% y/y) rapidly took hold after years of cost-cutting."

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Weekly US rail traffic rises on higher intermodal volumes

US intermodal traffic climbs 7% year-over-year in September

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