August 13, 2019
In a study with implications for logistics developments tied to rail access, the pricing advantage of shipping by rail is declining, says IHS Markit. The latest quarterly U.S. Domestic Intermodal Savings Index, produced by IHS Markit’s Journal of Commerce (JOC), shows that U.S. domestic intermodal shippers don’t save as much by converting loads from the highway to the rails as they did in recent years.
The dwindling pricing advantage means there’s less financial incentive for shippers to transport cargo “intermodal”—that is, via rail, where it’s onloaded and offloaded by trucks—rather than just utilizing trucking for the entire length of the trip. Trucking services have become more competitive on lanes under 2,000 miles, the index shows.
JOC’s latest quarterly index comes as U.S. railroads face slowing freight growth and U.S. trucking spare capacity increases, creating a new buying dynamic for U.S. shippers moving goods via 53-foot containers and trailers.
“The new data from the U.S. Domestic Intermodal Savings Index illustrates how shippers and brokers are becoming increasingly sensitive to whether intermodal or trucking is best for the various lanes they manage,” said JOC’s Ari Ashe, author of the report. “With C-Suite pressures to keep transportation costs down, shippers are looking to make the most informed decisions about modal choices to wisely spend down.”
Shippers compare transit times, on-time performance and total cost between intermodal and just trucks when deciding how to move their freight.
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