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86 Journal of Commerce | J anuar y 2, 2023 www.joc.com Surface Transportation Surface Transportation routes, intermodal spot rates were just 5 percent lower than truckload rates in the third quarter, compared with a savings of 26 percent on hauls of more than 2,000 miles, accord- ing to the JOC Intermodal Savings Index (ISI). Hub Group, J.B. Hunt, and Schneider were already pricing aggressively on those long-haul routes in the fourth quarter, and ship- pers expect this to continue into 2023 as the IMCs jockey for market share. Schneider wants to fully capitalize on its new exclusive partnership with UP that goes into effect Jan. 1, 2023, while J.B. Hunt is looking to capture share using the additional capacity on BNSF intermodal trains it gained after Schneider's exit, and Hub Group will try to protect volumes via its own long-term partnership with UP. A new normal: As consumer buying patterns return to a more normal mix of goods and services, domestic intermodal providers will have to find a way to fill a huge influx of boxes ordered during the pandemic. That means the healthy margins on ele- vated rates from shippers desperate to find capacity likely will not return anytime soon. JOC email: ari.ashe@spglobal.com twitter: @arijashe Railroad were at or below contract rates, indicating there was no uptick in volumes. The lack of growth during the peak season further underlined the overall weakness of domestic intermodal in 2022, given that private container fleets grew about 10 percent during the year, according to PIERS, a sister product of the Jour- nal of Commerce within S&P Global. Rail-owned container counts were essentially unchanged from 2021. A look ahead: Railroads want to keep service going in the right direction, with greater on-time performance, higher train speeds, and fewer crew shortages in 2023, but lingering discontent over the final terms of the union contract signed in December could cause a flare-up in labor-related service disruptions. Railroads that spoke with the Journal of Commerce declined to comment on 2023 inter - modal contract rates, but shippers believe intermodal providers will have to slash rates on lanes shorter than 1,200 miles to remain compet- itive with trucks. On those shorter A look back: Domestic intermodal vol- umes peaked in April 2022 at 33,360 loads per workday before tapering off, leaving total volumes through October 2.9 percent higher than in the same 10-month period in 2021, according to data from the Inter- modal Association of North America (IANA). That growth was uneven, however, with intermodal shipments hauled in private containers rising 7.7 percent year over year during the same period, while rail-owned con- tainer volume dropped 14 percent. As volumes fell from their April peak, intermodal service improved, albeit from a relatively low baseline in the first half. BNSF Railway intermodal trains, for example, were on time for more than 70 percent of arrivals beginning late in the third quarter, after averaging between 40 and 60 percent on-time performance in the first half of the year, according to the US Surface Transportation Board. During the traditional intermodal peak season, which runs from August through October, spot market rates on BNSF Railway and Union Pacific No peak season for domestic intermodal in 2022 Monthly domestic intermodal loads carried by North American railroads, per workday 23,000 22,000 24,000 26,000 28,000 30,000 32,000 34,000 36,000 L January April July October 2020 2021 2022 2022: 33,360 2021: 31,942 2021: 31, 2020:23,806 April 37,422 Source: Gross Transportation Consulting, Intermodal Association of North America © 2022 S&P Global Steep grade Domestic intermodal rail volumes likely to slip aer 2022 uptick By Ari Ashe The big picture: North American providers of domestic intermodal service will likely struggle to raise rates and grow volumes in early 2023 due to steep compe- tition from the trucking industry and fears over a slowdown in the US economy dragging down freight activity. If domestic intermodal volume grows in 2023, it will be because asset-based intermodal marketing companies (IMCs) Hub Group, J.B. Hunt Transport Services, and Schneider National continue to import new containers for use in their private fleets, rather than because of new demand for rail transportation. A drop in domestic intermodal volumes hauled in rail-owned containers was more than offset by growth in private container shipments. Ari Ashe / Journal of Commerce ANNUAL REVIEW & OUTLOOK 2023