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US spot intermodal savings dip but remain above historical average

Strong imports from Asia at US West Coast ports have helped lift rail rates . frameup / Shutterstock . com

By Ari Ashe

Despite rising rail rates in Southern California , intermodal shippers saved more than 20 % versus truckload on one-off business across the US in the third quarter , the second consecutive quarter in which spot market savings far exceeded historical norms , according to the latest Journal of Commerce Intermodal Savings Index ( ISI ).

While intermodal providers increased pricing in Southern California , truckload carriers also raised rates as demand grew with surging port volumes , negating any modal shifts based on budgetary concerns .

The Spot ISI averaged 122.3 for the third quarter , down slightly from the quarterly record of 123.5 in the second quarter but up from 116.4 in the third quarter of 2023 . The Q3 2024 average is also significantly higher than the 10-year Spot ISI average of 114.5 .

Spot truckload rates fell to $ 1.94 per mile by the end of September from $ 2.03 per mile in June , while intermodal rates rose to $ 1.61 per mile from $ 1.56 per mile over the same period . The spot intermodal number in September was the lowest per-mile rate since July 2020 , just before the pandemic-related freight surge jolted markets .

Despite truck rates going down and intermodal rates rising , the Spot ISI was minimally impacted because the shift was almost entirely in Los Angeles , which represents less than 25 % of the overall index value .

Outside of Los Angeles , intermodal and truckload spot rates continued to decline .

The Contract ISI , meanwhile , averaged 126.1 in the third quarter , up from 125.6 in the second quarter but unchanged compared with one year ago . Domestic intermodal shippers have saved between 25 % and 28 % across the US since January 2023 compared with truckload . There are no signs that will change until at least early 2025 , if not later .

Contract truckload rates fell 1 cent quarter over quarter to $ 1.95 per mile , while contract intermodal rates fell 2 cents .

Tepid rates in spot and contractual markets , excluding Los Angeles , have resulted in lower intermodal revenue and operating income for Hub Group , J . B . Hunt Transport Services , and Schneider National — the top three US intermodal providers .

The ISIs measure how much money a shipper should save on 120 modally competitive US lanes . There are two indexes , one for the spot market and one for the contract market . Index values are measured from a neutral base of 100 . Values greater than 100 indicate domestic intermodal is cheaper , while values less than 100 indicate trucking is cheaper . The higher the value , the more money intermodal saves an average shipper .

All index values correspond to percentages ; a value of 126.1 signifies an average US shipper saved 26.1 % on a domestic intermodal contract versus a truckload contract . A value of 122.3 signifies savings of 22.3 % comparing the spot intermodal and truckload markets .

The index assumes distribution centers are located less than 20 to 30 minutes away from the rail terminal at origin and destination . If the distribution center is an hour or more away , this could significantly reduce the savings calculated in the index or make long-haul trucking cheaper .

Gap in spot truckload , rail rates remains above historical norms

Average spot rates for US truckload and domestic intermodal rail , in USD per mile

USD per mile

$ 2.2 $ 2.1 $ 2.0

$ 1.0 1.9 $ 1.8 1.8

$ 1.7 $ 1.6 $ 1.5

L Jan 2023 Jul

Jan 2024

Source : Intermodal Savings Index

Spot Truckload Shipper Rates

Jul Spot Intermodal Shipper Rates

Oct , 2024

40 Journal of Commerce | December 2 , 2024 www . joc . com

December 2, 2024 | Page 40

Outside the norm