IANA reports Q3 intermodal volume decline

Third quarter 2023 intermodal volumes remained negative, seeing annual gains for the ninth consecutive quarter, according to the new edition of the “Intermodal Quarterly” report, which was recently issued by the Intermodal Association of North America (IANA).

Total third quarter volume, at 4,213,559, fell 7.1% annually. While volumes were off again annually, they rose on a sequential basis, topping the second quarter, which came in at 4,148,328 units. What’s more, third quarter volumes represented the highest level they have seen on a year-to-date basis, with IANA observing that fourth quarter volumes “are expected to see somewhat favorable comparisons given the weaker performance in the fourth quarter of 2022.”

Trailers again saw the steepest decline, falling 23.3% annually, at 160,280, representing the ninth consecutive quarter of double-digit declines (and its sixth straight quarter of annual quarterly declines topping 20%), with trailers accounting for 3.8% of total intermodal loadings, down from 4.9% and 4.4%, in the first and second quarters, respectively. Domestic containers, at 2,045,222, was the lone segment to see an annual gain, rising 1.6%, well ahead of a second quarter 6.3% annual decline, which marked its third straight quarter of declines on the heels of gains over the first three quarters of 2022. All domestic equipment, which is comprised of trailers and domestic containers, was essentially flat, down 0.5% annually, at 2,205,502. ISO, or international containers, fell 13.2%, to 2,008,057, matching the second quarter’s annual decrease, and falling for the third consecutive quarter.  

In the report, IANA explained that the intermodal sector faces a number of headwinds, in the form of import levels and inventory rebuilding remaining sluggish amid the overall strong performance of the economy. And it added that key sectors like housing and manufacturing continue to “show muted activity.”

What’s more, it added that truckers have reduced rates in an effort to attract shippers and gain a larger share of a shrinking freight market—in turn having a negative impact on intermodal. IANA also pointed to how inflation-adjusted inventories, not including automotive, are around 13% higher than pre-pandemic peaks. Which it said plays a key role in the decreased demand for freight, as retailers and warehouses sit on out-of-season product, as well as overbought, pandemic-related items.

Looking ahead, IANA said that while the broader economy is expected to remain on solid footing for the remainder of 2023, it expects the freight outlook to be weaker, due to what it called the sluggishness of freight-related components of the economy

IANA said it expects ISO containers moving by rail to be down 11.3% for all of 2023, domestic containers to be down 2.0%, and trailer loads to fall by 24.9%—for a projected full-year 2023 7.7% annual volume decline.

In an interview with LM, IANA President & CEO Joni Casey explained that competition from motor carriers continues to have significant impact on intermodal volumes in the third quarter, but she said that comes with the caveat that trucking's operational costs are rising, which can open the door for increased domestic intermodal activity. 

When asked about intermodal impact should the current inventory situation improve, Casey said: “Lower inventories reflect higher consumption, which would translate into growth in international intermodal traffic, as restocking occurs. This, in turn, should stimulate transloads as goods are moved inland, especially if OTR capacity starts to tighten.”

As for intermodal expectations for the fourth quarter, Casey said that the fourth quarter is likely to mirror what has been happening in the third quarter, with very modest upticks in intermodal loads compared to the same period in 2022.

“We are looking towards 2024 for a larger turnaround in intermodal volumes,” she said.