Intermodal Market Trends & Statistics - 4th Quarter 2016 - 8

Intermodal Market Trends & Statistics
ing 12 months - e.g. the 12 months
ending in December of 2016, and so
forth. There has been a significant shift
in trends for several measures.
The first chart looks at volume by
equipment type. It is indexed to the
first quarter of the period. International
fell off after a slow-but-steady pace of
growth post-recession. Trailers fell to
just half of their level ten years ago. Domestic containers slowed a bit, but have
been rising throughout this time period.
The second chart shows volume for
key lane groupings: Transcon Eastbound, Transcon Westbound, NorthSouth and East-West. It is also indexed
to the first quarter in the period. The
transcon lanes are defined by movement between coastal regions - the
Northeast, Southeast and Eastern
Canada on the east coast and the
Northwest, Southwest and Western
Canada on the west coast. The NorthSouth and East-West lanes encompass
freight in both directions, excluding the
transcon lanes. North-South volume
was the fastest growing segment postrecession until recently; it dropped
sharply over the past year. Transcon
has remained fairly level, while EastWest flattened out after a strong surge.
Finally, the third chart highlights
length of haul as estimated from the
IANA Market Trends and Statistics data
using key points in each region - e.g.
Los Angeles in the Southwest, Atlanta
in the Southeast. International lengthof-haul has continued to trend down
as container imports have shifted from
West to East. But domestic container
length-of-haul has turned up sharply,
likely a result of tougher competition
for short-haul lanes.

rise in Q4 was encouraging. Though
gains did return, the disconnect between import growth and international
loadings continued. With U.S. imports
up over 8% in Q4, U.S. international
volume was up just over 1%. West
Coast transloads are a factor, though
in both the NW and SW the share of
imports transferred to big boxes was
down slightly in Q4 from the prior year.
All-water share followed a similar pattern. This suggests that low fuel prices
and surplus truck capacity are also
weighing on this sector.
International can improve as trucking tightens, fuel prices trend up and
railroads develop new services to
further penetrate this market. However,
key to this segment is any pending
change to U.S. trade policy. Industry
followers will need to keep a close
eye on any new policies which could
impact the flow of international trade
in the near future. As this was written,
policy change is yet to be fully determined and implemented.
The domestic container side carried
the intermodal industry in Q4 and this
should continue into 2017. Increased
trucking regulation that is still expected
in late 2017, and upward trending
diesel prices, could help boost growth.
Most importantly, railroads continue to
focus on domestic intermodal as the
top segment to help replace other rail
commodities that have declined over
the past few years. There are many rail
industry plans for new services, new
facilities and improved performance
to maintain and accelerate big box
growth.
Finally, trailer loadings started to level off in Q4. Though down 9.2% overall
for the last quarter, volumes actually

Intermodal Outlook
After very difficult mid-year results,
North American intermodal loadings turned positive, with very modest growth in Q4 of 2016. This could
very well be a precursor to improving
intermodal performance in 2017. With
domestic container growth still solid,
trailers losses starting to level off, and
international loadings finally inching
above year-ago levels, there is reason
for hope.
The biggest question for 2017 is
whether international loadings will continue to regain momentum. The small
Fourth Quarter Year-End 2016  © IANA 2017

rose slightly year-over-year in December. That was likely aided by soaring
e-commerce spending, which drives
rising parcel shippers' trailer loadings
during the holiday season. Also, the
fact that past Triple Crown loadings are
no longer part of year-ago comparison
going forward should certainly help
keep trailer loadings at least flat, if not
modestly improving. It remains to be
seen whether rising fuel prices and
tightening truck capacity can also boost
trailers a bit higher.
Overall, intermodal growth is expected to return to a positive in 2017,
though perhaps not at the pace prior
to 2016's drop. Increases averaged
4.6% over the five years prior to 2016.
Projected growth in 2017 appears
likely to be at about half that pace. With
domestic container growth steady and
trailers likely leveling out, the wild card
will be whether the increasingly volatile
international segment can get back on
track. It will take at least several months
to fully understand this segment's
future direction.
Other developments:
 In December, CSX completed phase
one of the Virginia Avenue Tunnel
clearance project in Washington,
DC. That allowed carrying doublestack container trains between MidAtlantic ports and the Midwest on
CSX's network.
 BNSF and KCS introduced new joint
intermodal service across the U.S.Mexico border. Starting December
1, service was offered five days a
week between Chicago, Dallas/Fort
Worth and other major BNSF markets and key consumer and industrial locations on KCSM.

Railroad Fourth Quarter Earnings Per Share

CN1

4th Quarter
2015
2016
$1.18
$1.32

Year to Date
2015
2016
$4.44
$4.67

Canadian Pacific1

$2.08

$2.61

$8.40

$10.63

CSX

$0.48

$0.49

$2.00

$1.81

KCS

$1.28

$1.21

$4.40

$4.43

Norfolk Southern

$1.20

$1.42

$5.62

$5.10

Union Pacific

$1.31

$1.39

$5.49

$5.07

Results reported in Canadian dollars
8

Table of Contents for the Digital Edition of Intermodal Market Trends & Statistics - 4th Quarter 2016