Rail Freight Weakens But Intermodal Grows

m-intermodal-bnsf-doublestacks-okla-cr-wikicommon-dougwertman-1-1Overall freight expenditures have continued to decline, according to Patrick Casey, vice president, fleet management at TTX, a privately owned rail car pooling company.

Speaking at a recent ACT Research seminar, he said that exports and rail carload were again among the weakest sectors in the U.S. freight industry. “The spread between expenditures and shipments has tightened significantly, suggesting lower prices.”

While a lot of rail freight is not growing, Casey indicated that rail intermodal is growing and is doing so faster than trucking for hauls of 500 miles or more. He explained that intermodal is very dependent on macroeconomic conditions and said one of the primary drivers of intermodal use is container imports.  “Close to half of container imports and exports move by rail.”

Conditions at ports have an impact on intermodal and Casey believes “improved port conditions could allow 2% to 3% more container import growth based on rising demand.”

The chosen port is a key factor in rail demand. Products coming in to West Coast ports are more likely to be shipped via rail, but Casey sees rail car’s share of freight growing out of East Coast ports. However, he said economics sill favor west coast port use for freight to reach many non-east coast destinations.

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