JBHT - Loose Truckload Market Pressures Intermodal Volume in Eastern Corridors | Benzinga
In dense lanes with very long lengths of haul, like Los Angeles to Chicago, a trip that exceeds 2,000 miles, it's easy for rail intermodal to undercut truckload on price. In that lane, the per-mile cost advantage that intermodal has on the rail linehaul and fuel surcharge portions of the total cost generally more than offset the relatively high per-mile first- and final-mile drayage costs associated with rail intermodal. As a result, intermodal volumes in that and similar lanes are largely protected against a loose truckload market.
Market dynamics are far different in shorter-haul lanes. Shorter intermodal lanes, which are primarily located in the Eastern one-third of the country, are far more competitive with the highway. Examples include Chicago to Atlanta; Newark, New Jersey, to Chicago; and Chicago to Harrisburg, Pennsylvania. Those lanes take no longer than two days on the highway, and the cost benefit of the lower rail linehaul costs is greatly diminished simply because the rail linehaul covers fewer miles and thus, a lower portion of the all-in cost.
The Intermodal Contract Savings Index in SONAR illustrates that dynamic. It compares the cost to move a load on the highway to the cost to move rail intermodal, with fuel included for both modes. To eliminate variables, it only compares loads moving within the same five-digit zip code origin-destination pairs moving in the same week. It currently shows that intermodal shippers save an average of 17% on long hauls (green line — routes exceeding 1,200 miles) versus truckload, exceeding the 9% savings rate when ...