Intermodal has busted into positive YOY territories, led by….the USA! And the USA has been led by….the west coast (LA/LB)! One port/liner expert I know noted the share (re) capture form the west coast (really LA/LB) ports and stated: “LA/LB is regaining share right now due to an increased emphasis on the part of several major retailers on minimizing transit times. Much of the rationale for the faster transits is that with more and more people working from home, due to Covid-19, a greater amount of merchandise is buying ordered on-line and a reduced amount is being purchased in stores……..Amazon (which brings most of its Asian imports to West Coast trans-load locations) is catalyzing other retailers to speed up their deliveries to stay competitive.” Larry Gross, “Mr. Intermodal” (whose “Intermodal In-Depth” is essential reading) also notes two-plus interesting trends:
- Rail /IM velocity (not necessarily service) has deteriorated as the volumes have come back – is this, as Larry believes, a simple (and awful) return to the same old pattern? Had the velocity increases been simply the results of an economically decongested network? And not the results of PSR, Capex, and IT? I was assured that the letter regarding rail capacity (crews and power) and service issues jointly from the STB and the FRA was not about IM, but there have been grumblings….again, we mustn’t forget the sharpness of that pandemic sawtooth!
- The growth is being driven by domestic IM (which he notes was up M/M in July while ATA-reported truck tonnage was down 5% even as the driver-shortage issue is rising again like a vampire).
- Also noted was the 16% YOY growth of what he calls “short trailers” (say 28’ pups) which are….E-commerce!
- But in the current (October) issue of “Trains”, Larry does come down too hard on PSR as a reason for rail/IM share issues (what about Canada!) and in support of rail mergers (don’t get me started!).
The excellent IANA/TTX webinar also adds some needed color to the dynamic – to say the least – IM environment”
- They agree with my expert (above) on what they called “the need for speed” driving LA/LB volumes at the expense of cheaper but slower - and less rail-intensive - “all-water” east coast port moves; this has also driven the 13% /14% YOY growth in June & July in trans-loading (3 40’ international boxes to 2 53’ boxes now labeled “domestic”).
- They remind us all that the January “Phase One “ agreement with China was not a trade-war peace treaty, just a cooling-off – tariffs remain on ~$361B (B) of Chinese goods that includes furniture (in the midst of a housing boom-let) and electronics (as everyone sets up home offices and schools).