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January 2 2023

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84 Journal of Commerce | J anuar y 2, 2023 Surface Transportation Surface Transportation The big picture: North American railroads could see international intermodal — also known as inland point intermodal (IPI) — volumes drop in 2023, but that will depend on how many shippers are flush with inventory and reluctant to accelerate imports. Other factors that could weigh on demand include service issues, competition from trucking, and an ongoing coastal shift in imports. If inland rail ramps remain congested due to chassis shortages and discretionary imports continue to flow to the East Coast instead of the West Coast, international intermodal volumes could decline for a second straight year. Northwest, and on the US–Mexico border in Laredo, Texas, unpacking ocean containers and restuffing the cargo into 53-foot domestic boxes before putting them on trains. As J.B. Hunt gets more capacity on BNSF trains, it is also hoping to grow its domestic container fleet from about 115,000 to 150,000 containers within the next three to five years. Shippers can save money and dock-door space by converting four FEU into three domestic containers, and railroads are unlikely to dissuade this practice because they still receive revenue for moving the domestic boxes. However, transloading still comes at an additional cost, which could keep a portion of cargo on IPI in 2023. A new normal: The migration of discretionary cargo from the West Coast to the East and Gulf coasts accelerated in the lead-up to the West Coast longshore labor talks that began in May. That acceleration con- tinued through the end of the year, and if a portion of this shift becomes permanent — which many predict it will — this will be a net negative for IPI volume. A smaller percentage of loads arriving at East Coast ports are moved inland by train because the length of haul into the US heartland is shorter, making trucking rates more competitive with rail than on the West Coast. JOC email: twitter: @arijashe are normally pre-mounted on chassis. Norfolk Southern Railway opened aux- iliary lots to handle the overflow ocean containers. As a result, some importers will continue to limit their use of intermodal until railroads and chassis providers can prove they've overcome the challenges of the last two years. Instead, those shippers are turning to domestic intermodal or trucking to get goods inland from the ports. A look ahead: In addition to service and cost issues, transloading oppor - tunities will also pose a threat to IPI volumes. BNSF and J.B. Hunt have teamed up to open transload facilities in Southern California, the Pacific A look back: Despite booming US containerized imports, the total number of ocean containers traveling by rail fell 7 percent year over year in the first 10 months of 2022, accord- ing to the Intermodal Association of North America (IANA), with no sign that a return to growth is on the horizon. Intermodal rail service was below par for the second straight year due to chronic chassis shortages and container backlogs at rail terminals in Chicago, Dallas, Kansas City, and Memphis, among others. Western Class Is BNSF Railway and Union Pacific Railroad, for example, were forced to stack containers at several "wheeled" facilities, where containers On the wrong track Waning demand, service issues to weigh on international intermodal volumes By Ari Ashe North American inland point intermodal (IPI) volumes sag in 2022 Monthly international intermodal loads carried by North American railroads 620,000 600,000 700,000 850,000 800,000 750,000 650,000 L January April July October 2020 2021 2022 2020: 685,491 202 2022: 752,610 2021: 840,117 2021: 840,117 April April 857,613 850 000 Source: Gross Transportation Consulting, Intermodal Association of North America (IANA) © 2022 S&P Global Ted McGrath / Flickr ANNUAL REVIEW & OUTLOOK 2023

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