Commentary Land Lines

By Larry Gross

Maybe intermodal can’ t control its IPI destiny, but the same isn’ t true with domestic.

Intermodal performance in recent years has largely been a function of international, or inland point intermodal( IPI), volume. Robust imports, East Coast labor issues and then tariff frontloading have combined to provide a powerful boost to the volume of ISO containers moving via intermodal.

However, domestic intermodal— i. e., cargo carried in 53-foot domestic containers— has not seen the same strength. Further, the signs all point toward a slowdown for international intermodal. Where do things go from here?

Railroads and analysts point to the prolonged“ trucking recession,” now at three years and counting. Capacity that was added to the truckload sector has been slow to exit, resulting in a prolonged period of downward rate pressure. The theory is that intermodal currently suffers from adverse market conditions, and once things return to“ normal,” intermodal will once again thrive.

The data, however, indicates that there is a more fundamental problem, one that has been in place for at least 10 years. From 2015 through the second quarter of 2025, the latest data available due to the US government shutdown, US real GDP increased 25 %, while long-haul truckload volumes rose only 21 % through the third quarter. There are likely several reasons for the undershoot.

First and foremost has been growth in the service sector, accounting for an increasing proportion of GDP. Growth in services does not correspond to growth in freight demand. Growth in the goods-producing sectors of the GDP has been lower than the headline number.

Secondly, average truck length of haul has been dropping, pulling down long-haul growth. We define long-haul as intermodal-competitive dry van and reefer truckloads moving 500 miles or more. Thirdly, shippers are getting better at loading trailers. Improved packaging has helped increase the average amount of product per truckload.

On the other hand, growth in import TEUs has been outstanding, up 42 % in the third quarter of 2025 versus 2015.

Intermodal, meanwhile, has increased only 7 % over the past 10 years. International / IPI most recently stood at a 5 % gain, while domestic was up 9 %. Both pale in comparison with the relevant benchmarks.

The IPI shortfall is huge, but probably most of it was beyond intermodal’ s control. Since 2015, some 77 % of the growth in import TEUs occurred on the East and Gulf coasts— a substantial IPI headwind, as intermodal share off the West Coast is somewhere in the 60 % to 70 % range, compared with no more than 15 % in the East.

Growth in transloading in the West also held back IPI volume. I estimate that transloads into domestic containers now account for about 60 % of the import TEUs into the southwest ports coming from the region on rail.

Maybe intermodal can’ t control its IPI destiny, but the same isn’ t true with domestic. Even with the aforementioned transloading boost, domestic intermodal growth has not matched truckload since 2018 at the height of the electronic logging device( ELD) capacity crunch.

Subsequently, volume tanked as the truckload market normalized and precision scheduled railroading( PSR) retrenchment encouraged additional volume to head back to the highway. Domestic intermodal once again got fairly close in 2021 during the early days of the post-pandemic surge, before congestion and service disruptions took their toll.

The underperformance is clear. The result is loss of share versus truck. Domestic intermodal has been stuck at about a 6 % share for the past three years, down from about 6.9 % 10 years ago.

Now, the market situation may be changing a bit in favor of intermodal. I don’ t expect a big improvement in demand for truckload transportation. However, the Trump administration’ s multipronged pressure on immigrant truck drivers could sideline a significant percentage of long-haul drivers, pressuring supply. This will cause trucking rates to rise, simply because they are already at rock bottom and the carriers cannot absorb the cost of higher driver wages while holding rates steady.

There could even be a capacity shortfall, depending on how fast the reduction takes place. A capacity crunch will result if departures exceed the industry’ s ability to backfill with new drivers.

The ELD crunch exemplified this phenomenon. The industry’ s recruiting efforts caught up eventually— the same thing could happen now.

When and if the trucking rates go up, the intermodal sector will have a choice: follow the trucking rates upward and improve margins, or hold rates steady, letting the differential between truck and intermodal rates widen, and take the benefit in the form of higher volume and improved market share.

But even if the competitive environment improves, assuming that the intermodal competitiveness problem is solved would be a mistake. The industry has a long-term growth problem, and the solution is not to wait for the“ goldilocks” market.

Intermodal needs to be able to perform against truck in all stages of the economic cycle. What should happen will be a topic for another column.

email: lawrencejgross @ gmail. com

52 Journal of Commerce | December 1, 2025 www. joc. com