Weak first quarter will hurt intermodal market growth

Intermodal loadings fell by as much as 4 percent due to weather events impacting the western network, Todd Tranausky said in an FTR State of Freight webinar.

Weak first quarter will hurt intermodal market growth

Intermodal loadings fell by as much as 4 percent due to weather events impacting the western network, Todd Tranausky said in an FTR State of Freight webinar.

Weak first quarter will hurt intermodal market growth

Intermodal loadings fell by as much as 4 percent due to weather events impacting the western network, Todd Tranausky said in an FTR State of Freight webinar.

 

   First-quarter weakness in the intermodal market caused by weather-related disruptions will hold back full-year growth, said Todd Tranausky, FTR’s vice president of rail and intermodal, Thursday in a State of Freight webinar.
    “We had a significantly weaker first quarter than we expected, and we don’t really expect that to be made up as we get back through the year,” he said during the “Intermodal Growth Prospect” webinar. “We expect to see growth rates going back in the positive territory certainly in the second, third and fourth quarters, but there will definitely be a headwind from what we experienced here in the first quarter.”
    The four-week average of North American intermodal loadings dropped by as much as 4 percent between February and March but has since recovered to a less than 2 percent decrease. The downturn was caused by the snow and flooding that hit the western intermodal railroad network during that time, Tranasuky said.
    The four-week average intermodal train speeds are 5.3 percent slower in 2019 compared to last year, which, in part, is due to the weather-related events. Tranausky said he expects it to take four to five weeks for the networks to return to full speed, but the pace at which they restore the lines will have an impact on the full-year growth prospects.

   “2019 looked really good to start, but then weather hit and things really sort of went downhill very, very quickly,” he said, referencing the trend through the first five weeks that train speeds would surpass the 2018 level. “We would expect because of how the railroads started the year, we would hope they would very quickly — once they’re able to fully restore their networks to see service performance — come back and improve from where they are today.”
    The timing and the mode chosen for how the warehouse volumes are going to be taken to market also will have an impact, he explained.
    The trailer market held up better than expected through the first quarter, Tranasuky said. Despite the four-week average trailer loadings falling by nearly 10 percent in March, the drop wasn’t to the level that surpassed what the market gained in 2018.
    The trailer market is more of an eastern market, which wasn’t as impacted by the weather events that plagued the western networks, he said, which created the support for the trailer market.
    The intermodal market also has faced stiffer competition from a stabilized trucking market. Trucking capacity is far below the 2018 levels so far this year, which gives shippers an option to move more freight by truck.
   On-highway diesel prices have remained steady for much of 2019, staying between a 15 cent year-over-year drop or increase. Trucking companies gain cost certainty for shippers if those rates remain steady, Tranasuky said.
    To remain competitive, Tranasuky said intermodal carriers need to provide a consistent service to win shippers’ business over the trucking market.
    “The railroads have struggled over the last two years in terms of being able to consistently prove to shippers that when they say the shipment’s going to get there, it will get there,” he said. “But shippers no longer have to just accept it in the intermodal space. The more stable trucking market that you had last year means that trucking is really a viable competitive alternative to intermodal and gives shippers choice.”

We are seeing many more pricing requests for Southeast Asia and the Indian subcontinent. Few actually moved their supply chains outside of China because this will take time, especially for larger shippers. However, Taiwan and South Korea are in a unique situation: Some manufacturing had shifted to mainland China in the last decade due to lower costs, but that infrastructure is still in Taiwan and South Korea. Some manufacturing may temporarily shift back there until Southeast Asia infrastructure catches up. 

The fastest liner transit (excluding transshipments) from China to the Netherlands is from Yantian to Rotterdam at 23 days, according to BlueWater Reporting’s Country to Country Transit Analysis by Service tool.

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Los Angeles’ first-quarter volumes up 4.6 percent

Los Angeles’ first-quarter volumes up 4.6 percent

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Weak first quarter will hurt intermodal market growth

Intermodal loadings fell by as much as 4 percent due to weather events impacting the western network, Todd Tranausky said in an FTR State of Freight webinar.

Apr 11, 2019 on Dec 27, 2018AmericanShipper.com

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Weak first quarter will hurt intermodal market growth

Intermodal loadings fell by as much as 4 percent due to weather events impacting the western network, Todd Tranausky said in an FTR State of Freight webinar.

Apr 11, 2019 on Dec 27, 2018AmericanShipper.com