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September 17 2018

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36 The Journal of Commerce | September 17 2018 Intermodal Market Special Report By Ari Ashe THE US INTERMODAL peak season is expected to kick into high gear in the coming weeks, and shippers hope that service will have improved from earlier this year, while fore- casts show year-over-year volume will be greater. Data show demand has been strong in all surface transportation modes this year, and there are no signs that anything will change in the final four months of 2018. From a macroeconomic perspective, although many economists believe a recession could occur within the next three years, the short-term forecast is strong. According to the US Bureau of Economic Analysis and Moody's Ana- lytics, the US economy is expected to grow 3 percent this year versus 1.5 percent and 2.2 percent, respec- tively, in 2016 and 2017. Transporta- tion economists generally agree 3 per- cent growth in GDP equates to robust freight demand, a general maxim that bears out in the numbers. The Intermodal Association of North America (IANA) reports that overall traffic was 6.8 percent higher year over year through July. Marine container volume rose 6 percent, including a 6.9 increase in 40-foot containers and a 4.5 increase in 20-foot boxes. Domestic intermodal using 53-foot containers grew 6.2 percent year over year through July. American Trucking Associations monthly data show truck tonnage rose 8.6 percent year over year on a seasonally adjusted basis in July; year-to-date volume is 8 percent higher than 2017. The Cass Freight Index rose nearly 11 percent in shipments and almost 18 percent in expenditures for July, based on freight invoices processed by banks among multiple modes. "We are confident that the increased spending on equipment, technology, and people will even- tually result in increased capacity in most transportation modes. That said, many modes are reporting limited amounts of capacity or even no capacity at any price shippers are willing to pay," said Donald Brough- ton of Broughton Capital, author of the report. "That these percentage increases are so strong and strong against tough comparisons, explains why our outlook is so bullish, why capacity is so constrained, and why realized pricing is so strong." Few regions in the United States show any weakness, or any negative signs to come. Through June, IANA reports double-digit growth in six major intermodal lanes: Northeast-Midwest, Northeast-Southeast, Midwest-North- west, Midwest-Western Canada, South Central-Midwest, and intra-Canada. Traffic receded 8.2 percent between the Pacific Northwest and the Midwest, the only lane showing decline. Ask different people in the supply chain and you will get varying answers on whether wide-ranging tariffs will alter the peak season. Some non-ves- sel-operating common carriers and freight forwarders have told The Jour- nal of Commerce that their customers loaded up on inventory manufactured in Asia before any announcement from the White House. But Jason Hilsenbeck, founder of intermodal directory LoadMatch and, doesn't see unusual click activity on his webpage to in- dicate shippers or logistics providers are searching in earnest for capacity to haul containers. Conversations with Chicago-based drayage pro- viders also indicate that business is strong but not unusual for August or suggesting the typical peak-season calendar has been thrown out. "Consumption [of durable and non-durable goods] has been pretty good over the last six months, but the containerized imports have been below the consumption rates. If there was a lot of inventory building occurring ahead of tariffs, you would expect imports to outpace con- sumption rates," said Pat Casey, vice president of TTX, during an Aug. 23 webinar hosted by IANA. Strong growth forecast The intermodal group forecasts domestic container volume to grow 5.8 percent for the full year and imports nearly 7 percent. Because 53-foot container volume grew 6.2 percent and 40-foot traffic 6.9 per- cent through July, strong conditions are expected to continue through December, according to IANA. When adding in trailer-on-flatcar

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