Intermodal posts record gains in 2003
______________________________
Source : http://www.manufacturing.net/lm/article/CA380536
________________
By Staff -- 2/1/2004
This could be the year. With intermodal rail shipments in the United States and Canada reaching an all-time high in 2003 on the strength of a record 6.8-percent increase, intermodal stands to overtake coal shipments as the railroads' largest source of revenue.
According to a study done by the Association of American Railroads (AAR) last month, railroads moved more than 12 million containers last year, up from 11.3 million in 2002. Of that total, 9.9 million were U.S.-based shipments.
A number of factors spurred the uptick in intermodal shipments. "The economy has started to improve," says Tom White, AAR's director of editorial services. "Most consumer goods that move by rail move by intermodal, and that has had an impact on growth this past year. In addition, through most of the year the railroads' service levels were extremely high. This made it more practicable for customers to use the intermodal service."
The intermodal upswing actually began in late 2002, White says, when worries about a potential West Coast port shutdown prompted shippers to switch transportation modes.
When that three-week lockout did indeed happen, even more shippers made the switch—and many stayed with intermodal service even after the threat had passed. "That generated an early uptick in the third quarter of 2002, and it continued through this year," White notes.
By contrast, the AAR report showed, carload shipments increased by only 0.1 percent in 2003. Still, this minute rise comes on the heels of 2002's slight decline in carload volumes. "There were a couple of influences dragging it down," White says. "One was the continued problems in the domestic steel industry. ... That had a definite impact on our loading of metallic ores, which were off substantially last year." White also points to the relatively mild summer of 2003 and resulting lower demand for electricity, which meant reduced demand for coal, the railroads' largest source of business.
Intermodal, meanwhile, has the momentum to move up in volume again this year. White notes that since 1980, intermodal volumes have grown in every year but two. "Intermodal volume has tripled since 1980," he says. "We think this is the year that intermodal will overtake coal as the largest source of revenue for the railroads."
Tom Malloy, vice president of business development for the Intermodal Association of North America (IANA), points out that over the past 20 years intermodal volumes have annually risen by an average of 4.5 percent. He says that the industry is poised for another strong leap. Forecasts are bullish, and experts are predicting another 6.8-percent jump for 2004. The lion's share of that increase will come from international shipments, he says. "Imported containers are up. Look at all the port activity that's reported—the steamship lines are handling more cargo. There's more demand for imported goods as everyone moves production offshore."
Difficulties facing the trucking industry are also contributing to intermodal's climb. As the new hours-of-service regulations make their impact known in service and capacity, White expects, more shippers and motor carriers themselves will switch to intermodal. "Some people in the trucking industry have said they'll look to intermodal even more as a means of dealing with [the impact of the hours-of-service rules]," he explains. "Plus, there's the continuing problem of driver shortages. That would seem to augur well for continued growth in intermodal."
Malloy also sees driver shortages, along with a changing mindset on the part of the trucking companies, as a factor in intermodal's favor. "[Companies are] finding that more drivers want to do runs that put them in a situation to be home on a weekly basis," he observes. "That's led to a lot of opportunities for intermodal. Conventional wisdom is that intermodal hits its stride at anything in excess of 500 miles. Motor carriers are looking at this and seeing they can get some scale by keeping drivers dedicated on expedited or higher-paying freight and utilizing intermodal for some of the other freight.
______
______________________________
Source : http://www.manufacturing.net/lm/article/CA380536
________________
By Staff -- 2/1/2004
This could be the year. With intermodal rail shipments in the United States and Canada reaching an all-time high in 2003 on the strength of a record 6.8-percent increase, intermodal stands to overtake coal shipments as the railroads' largest source of revenue.
According to a study done by the Association of American Railroads (AAR) last month, railroads moved more than 12 million containers last year, up from 11.3 million in 2002. Of that total, 9.9 million were U.S.-based shipments.
A number of factors spurred the uptick in intermodal shipments. "The economy has started to improve," says Tom White, AAR's director of editorial services. "Most consumer goods that move by rail move by intermodal, and that has had an impact on growth this past year. In addition, through most of the year the railroads' service levels were extremely high. This made it more practicable for customers to use the intermodal service."
The intermodal upswing actually began in late 2002, White says, when worries about a potential West Coast port shutdown prompted shippers to switch transportation modes.
When that three-week lockout did indeed happen, even more shippers made the switch—and many stayed with intermodal service even after the threat had passed. "That generated an early uptick in the third quarter of 2002, and it continued through this year," White notes.
By contrast, the AAR report showed, carload shipments increased by only 0.1 percent in 2003. Still, this minute rise comes on the heels of 2002's slight decline in carload volumes. "There were a couple of influences dragging it down," White says. "One was the continued problems in the domestic steel industry. ... That had a definite impact on our loading of metallic ores, which were off substantially last year." White also points to the relatively mild summer of 2003 and resulting lower demand for electricity, which meant reduced demand for coal, the railroads' largest source of business.
Intermodal, meanwhile, has the momentum to move up in volume again this year. White notes that since 1980, intermodal volumes have grown in every year but two. "Intermodal volume has tripled since 1980," he says. "We think this is the year that intermodal will overtake coal as the largest source of revenue for the railroads."
Tom Malloy, vice president of business development for the Intermodal Association of North America (IANA), points out that over the past 20 years intermodal volumes have annually risen by an average of 4.5 percent. He says that the industry is poised for another strong leap. Forecasts are bullish, and experts are predicting another 6.8-percent jump for 2004. The lion's share of that increase will come from international shipments, he says. "Imported containers are up. Look at all the port activity that's reported—the steamship lines are handling more cargo. There's more demand for imported goods as everyone moves production offshore."
Difficulties facing the trucking industry are also contributing to intermodal's climb. As the new hours-of-service regulations make their impact known in service and capacity, White expects, more shippers and motor carriers themselves will switch to intermodal. "Some people in the trucking industry have said they'll look to intermodal even more as a means of dealing with [the impact of the hours-of-service rules]," he explains. "Plus, there's the continuing problem of driver shortages. That would seem to augur well for continued growth in intermodal."
Malloy also sees driver shortages, along with a changing mindset on the part of the trucking companies, as a factor in intermodal's favor. "[Companies are] finding that more drivers want to do runs that put them in a situation to be home on a weekly basis," he observes. "That's led to a lot of opportunities for intermodal. Conventional wisdom is that intermodal hits its stride at anything in excess of 500 miles. Motor carriers are looking at this and seeing they can get some scale by keeping drivers dedicated on expedited or higher-paying freight and utilizing intermodal for some of the other freight.
______