After four consecutive years of record-breaking intermodal growth in the railroad industry, container and trailer traffic dropped 1.6% in 2016, according to data from the Association of American Railroads.
“Last year was challenging for freight railroads,” said John Gray, AAR senior vice president of policy and economics. “Rail carloads were down for the second consecutive year, due mainly to a weak manufacturing economy and turmoil in energy markets, while intermodal failed to set its fourth straight annual record. That said, there are signs that the economy may be gradually returning to a period of growth.”
“The primary culprits would seem to be more East Coast import [containership] routings that are less intermodal-friendly, more transloading into domestic intermodal equipment and perhaps more truck competition,” said Larry Gross, an intermodal and rail expert at consultancy firm FTR.
At the bottom of the spot market in 2016, truckload rates were so low that it convinced some shippers to shift modes from rail to road to save money, but he said that current signs point toward a reversal in 2017.
“With demand strengthening, truck spot rates rising and overall truck capacity utilization tightening as [electronic logging device] implementation day approaches, I expect 2017 to be a considerably better year for intermodal than 2016.” Gross said.