Intermodal volumes see second quarter declines, reports IANA

Second quarter intermodal volumes fell for the sixth consecutive quarter, according to the Intermodal Quarterly report recently issued by the Intermodal Association of North America (IANA).

As IANA noted in its first quarter report, 2020 intermodal volumes have been up against the collected negative impact of COVID-19 related shutdowns, as opposed to 2019 volumes, which were the primary driver for 2019’s lower volumes.

Total second quarter volume—at 4,016,899 units—fell 11.9% annually. Domestic containers—at 1,742,968—slipped 7.0%, with trailers—at 259,752—falling 14.0%All domestic equipment—at 2,002,720—was off 8.0%. ISO, or international, containers, were down 15.4%, to 2,014,179.

The 11.9% annual decline is steeper than the first quarter’s 6.7% annual decline, based on IANA data. And the organization explained that the quarters were different, in that there was what it called a change in trend in the domestic container market and the slowing losses in the trailer market, from the first quarter to the second quarter. IANA President and CEO Joni Casey noted that the primary driver for trailer volume improvement is the increased level of e-commerce, which typically moves in trailers.

What’s more, the domestic container tally, down 7.2%, did not fare as well as the first quarter’s 2.2% annual gain, and ISO’s 15.4% decrease topped the first quarter’s 11.3% annual decline. On a bit of a more positive note, the 14.0% container decrease marked an improvement over the first quarter’s 23.3% drop off.

On a year-to-date basis through June, IANA reported total intermodal volume—at 8,194,888—fell 9.3% annually, with trailers and domestic containers, at 517,557 (down 18.9%) and 3,605,467 (down 2.5%), respectively. All domestic equipment—at 4,123,024—was down 4.9%, and ISO containers—at 4,701,864—falling 13.4%.

“The COVID-19 pandemic makes forecasting the intermodal market difficult to predict,” the report stated. “Total quarterly intermodal losses are not expected to exceed Q2’s steep decline of 11.9%. It 
is likely that international intermodal will fall between 10% 
and 15% during the rest of 2020. Falling U.S. imports due to COVID-19 shutdowns and high tariffs will continue to drag down international volume throughout the rest of 2020. Domestic containers are also expected to fall between 10% and 15%. Domestic containers decline over 2020 can be linked to an upsurge in trucking competition and a drop in transloading due to falling imports. Trailers were struggling before the onset of COVID-19 in North America, but are now expected to fall even further due to an increase in conversions to containers. Overall, total intermodal loadings are forecast to fall about 10% for all of 2020.”

Looking at ISO data, IANA said that the category saw declines in all U.S. regions tracked by IANA, with East Coast imports off 11.8% and West Coast imports down 7.6%.

IANA observed that due to COVID-19-related supply chain issues and the looming threat of tariffs, there was a subsequent shift from U.S. imports entering on the West Coast to the East Coast. And it explained that the aftereffect of this has resulted in a negative impact for West Coast ISO volumes, which competes with the West Coast domestic market because of transloading, while both regions dealt with the 9.9% decline in U.S. imports, for the quarter.

Addressing the trucking side of intermodal, IANA observed that second quarter of 2020 was the worst quarter on record for trucking, which it added is largely true for the entire U.S. economy, in light of what it called the sudden and deep contraction in the face of the COVID-19 pandemic. And it added that the additional freight volumes that were driven by panic buying in the early stages of the pandemic were intact in advance of the second quarter, with the recent surge in spot volumes not truly taking hold until June.

“Some of the shift of imports to East Coast ports is a continued trend,” said IANA’s Casey. “But there is still discretionary traffic that will move based on which ports are the most cost effective, the most efficient, and the most user-friendly.”

When asked what a sustained modest increase demand would mean for intermodal, from a volume perspective, and if it could result in increased share from the trucking side, Casey pointed out that consistent increased demand in both international and domestic freight moves will afford the potential for higher intermodal volumes. 

“And if highway capacity starts to tighten, this could also push freight to intermodal,” she said. “However, lower fuel prices, which currently exist, create some advantages for OTR moves.”