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April 27 2020

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April 27 2020 | The Journal of Commerce 33 www.joc.com Surface Transportation money in an economic recession could be the chief concern for shippers, although Johnson also acknowledged this would be in a best-case scenario. "Shippers will be looking for a more economical price point to move their goods. Just getting it there right away and 'we didn't care what we paid' was how shippers operated in the panic. However, now the econ- omy is in trouble, and you're looking just to stay afloat," he said. Other intermodal providers, however, believe the current low-volume environment could persist through 2020. Rick LaGore, CEO of the IMC InTek Freight and Logistics, doesn't believe railroads will be able to lower prices enough to capture freight, was $1.79 per mile, compared with $1.87 per mile in January, according to the load board operator. Absent surcharges, the average van linehaul rate on April 4 was $1.63 per mile. That's still up 5.2 percent from the same period a year ago. Loadsmart's data shows a sim- ilar seesaw in national spot truck rates: January at $1.91, February at [April] and probably longer," said Lawrence Gross, an intermodal analyst and Journal of Commerce contributor. "Then when it is lifted, I think it's going to be a struggle for intermodal business to come back, not a V-shaped snapback. People are out of work; we won't be able to turn that switch back on in a heartbeat." Half-full, or half-empty? Intermodal executives with an optimistic view believe a sharp recovery will occur and that com- panies struggling to navigate the recession will cut transportation budgets to compensate for lower sales, giving a potential advantage to intermodal as a cheaper alternative to trucks. "If [people] return back to work after April 30, that means shipping is going to increase drastically and capacity is going to shrink, and you're going to probably see that within a 30-day window," said Robb Johnson, a California-based agent of IMC Mode Transportation. Instead of quickly getting essen- tial goods to shelves, he said, saving while the Denver-to-Chicago rate dropped 14 cents, she said in a blog post April 6. DAT also said the average national dry-van spot wholesale rate, including fuel surcharges, averaged $1.83 per mile in the first two weeks of April after rising to $1.87 per mile in March. In Febru- ary, the dry-van wholesale average in part because diesel prices are so low, which makes trucking rates more competitive with intermodal. The US Energy and Information Administration reported the national average price for diesel the first week of April was $2.548 per gallon, down 54.5 cents compared with a year ago, and the lowest level since July 2017. "I think a number of these stores are never going to reopen, so there aren't many companies restocking right now. Those who are restocking are needing it quickly and using trucks," he said. "So I think we're going to take it on the chin for a while but hopefully not be taken down to the mat." JOC email: ari.ashe@ihsmarkit.com twitter: @arijashe $1.81, March at $1.90, and April at $1.83 per mile at press time. DAT's spot load posts were down 38.7 percent week over week as of April 4, after rising 39.1 percent year over year in March, according to DAT. That indicates that either the surge in freight brought on by panic buying has eased, and eased rapidly, or that contract carriers have reassigned equipment and are now hauling more of those shipments as other freight diminishes. "What we are seeing is despera- tion leading to cutting rates below what it takes to operate a truck," Tucker said. "It can't go on forever." Tucker thinks a widespread culling of under- capitalized, highly leveraged carriers, many of them small businesses, is likely to come before a reversal in pricing. That could make last year's uptick in bank- ruptcies seem insignificant. JOC email: ari.ashe@ihsmarkit.com twitter: @arijashe "It's going to be a struggle; we won't be able to turn that switch back on in a heartbeat." An estimated 14 percent drop in intermodal volume could cost the rail freight industry $9 billion in revenue in 2020, according to Deutsche Bank. V_E / Shutterstock.com Average dry-van spot rates across 200 top US freight lanes fell to $1.83 per mile in the first two weeks of April, aer surging to $1.94 per mile in March. Shutterstock.com

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