The outlook for intermodal dimmed this month as it appears volumes will hold at present levels through the end of the year. There is demand to move more goods via intermodal, but congestion and metering by the carriers are limiting how high volumes can go. The existing thinking is that volumes will not improve meaningfully until the mid-to-late-first quarter at the earliest.
Recent projects at the San Pedro Bay ports that encourage night and weekend movement of containers could increase the overall capacity of the system, but it remains to be seen how many shippers will take advantage of the additional opening hours at ports.
International volumes have declined more significantly on a sequential basis in September, as ocean liners encourage shippers to transload cargo near the port and return the international container quickly so that it can go back to Asia for its next load.
There is discussion of additional international and domestic containers being added to the fleet. Since nearly all container manufacturing occurs in Asia, though, the additional equipment is stuck in the same backlog of ships and freight that many consumer and industrial goods find themselves in heading toward the end of the year. The new containers are unlikely to come online before the first half of 2022, and it is unclear if additional chassis are also being built to support that equipment.
On the domestic side, volumes posted their third consecutive month of year-over-year declines as volumes continue to siphon off to domestic truckload carriers. Utilization remains strong in the competing mode, in part because of the additional freight coming from intermodal shippers. The outlook declined as a result.
Intermodal Rate Outlook
Rate increases are expected to ease back toward flat levels by the middle of next year.
The strong freight market and tight truck capacity are keeping rate expectations elevated for longer