Murky roads

Domestic carriers face uncertain forecast for 2024

By Ari Ashe

Domestic intermodal and truckload carriers are hoping they can raise rates on shippers in the second half of the year , but several of them acknowledged at the end of January that there is too much economic uncertainty to expect anything other than a tepid market environment for at least the next three months .

This would be the second straight year in which truckload and intermodal providers head into a bid season with pricing leverage on the side of the shipper .

Dave Jackson , CEO of Knight-Swift Transportation , said during an earnings call Jan . 24 there is no more room to lower prices . Knight-Swift ’ s fourth-quarter intermodal revenue fell 16 % year over year despite a 4.2 % increase in volume , while truckload revenue dropped 12.5 %.

“ We have some customers who are perhaps operating under a mandate , maybe a little bit of a short-term focus to be a little more aggressive [ on pricing ] and pushing , but the reality is , there is a limit to what you can do ,” Jackson said . “ There is a Clint Eastwood line , ‘ A man ’ s got to know his limitations .’ There is a place where we simply cannot concede anymore .”

Union Pacific Railroad ( UP ) reported that its intermodal revenue declined 5 % year over year in the fourth quarter despite a 5 % increase in volume .

The railroad said it does not know when it can regain pricing leverage , citing the uncertainty around interest rates and the outcome of the US presidential

election in November . Interest rates are an important factor because they affect the buying habits of consumers , ordering patterns of shippers and how much inventory is carried in warehouses .

“ Our volume outlook reflects headwinds from lost business and relatively soft economic forces , and much of that is out of our control ,” UP CEO Jim Vena said on a Jan . 25 earnings call . “ Many unknowns remain , but I ’ m confident we ’ ll succeed in the areas we control .”

J . B . Hunt Transport Services said there is a “ universal hesitancy to offer rate increases ” because shippers are “ under tremendous pressure not to have their costs go up .”

Mixed signals

UP said it ’ s hopeful the Falcon Premium service in Mexico and a new international intermodal terminal in

Intermodal , truckload spot rates racing to the bottom

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

USD per mile

$ $ 3.0 3

$ 2.8 $ 2.6 $ 1.0 2.4 $ 2.2 $ 2.0 $ 1.8 $ 1.6

Jan L 2022

Jul Jan 2023 Jul Dec Jan , 2023 2024

Spot Truckload Shipper Rates

Source : Journal of Commerce Intermodal Savings Index

Dewar Photography / Shutterstock

Spot Intermodal Shipper Rates

40 Journal of Commerce | February 12 , 2024 www . joc . com

February 12, 2024 | Page 40

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