Surface Transportation

Trucking | Rail | Intermodal | Air & Expedited | Distribution

COMMENTARY

By Ted Prince

While truck can always substitute for intermodal, the converse is not true.

Rising diesel prices are encouraging intermodal enthusiasts who view this as preceding inevitable success. Yes, fuel disproportionately increases truck cost-per-mile more than rail; however, this optimism is not new— it has been extant since the fuel crises of 1973 and 1979.

While the price of fuel has historically served as a tailwind for modal conversion it does not, by itself, guarantee success, which depends more on demand patterns, balance, drayage dynamics and loading characteristics.

Microeconomics states that consumers perceive substitute goods as having the same or similar performance characteristics, occasions for use, and they are sold in the same geographic area. Whereas trucks can go anywhere, intermodal cannot, so while truck can always substitute for intermodal, the converse is not true.

Intermodal has a lower cost-per-mile than truck; however, it has a higher fixed cost. A general rule-of-thumb is that intermodal is cheaper for long distances, a threshold oscillating between 600 and 1,200 miles. Intermodal also results in lower emissions. Unfortunately, this aspect seems less important than in the past: most shippers’ sense of green is cost.

Intermodal, like truckload, has been subject to inflationary pressures and, while many are similar, they vary in their materiality to delivered cost. When considering how intermodal competes with truckload, you need to determine the nature of the cargo, specifically: demand, balance and load configuration.

Is volume the same day in and day out throughout the year? If so, it will be very attractive to truck that puts a premium on closely aligning supply and demand.

The more asymmetrical the demand, the better it is for intermodal to absorb the surge and withstand the trough. The time frame can be anywhere from seasonal to day-of-the-week.

Consider a shipper with 10 loads per week. Are there two loads every weekday or one on Wednesday, two on Thursday and seven on Friday? The latter is much more attractive to intermodal.

Loaded vs. empty miles

Traffic balance reflects the difference in loaded and empty miles over the portfolio of loads. Imbalanced markets command a pricing premium to compensate for capacity evacuation to or from the next load. The greater the imbalance, the greater the premium charged on the loaded portion.

Loaded miles generate revenue; empty miles do not. However, for trucks, empty miles cost almost as much as loaded miles. Traditionally, there is a much wider cost disparity in intermodal loaded and empty cost. This is more attributable to rail pricing. In an extreme case, intermodal can support 100 % empty miles, for instance, Chicago – Boston( load-empty) and Los Angeles – Chicago( empty-load).

Although intermodal can withstand empty imbalance more effectively than truck, there is an additional balance issue for the intermodal drayage pickup / delivery. The same truck economics apply, so a drayage round trip with two loads will have a lower cost than one that is empty in one direction.

Rail miles are usually greater than truck miles. This extra time and distance increases door-to-door transit times versus a more direct truck route, slowing intermodal shipments. Also, whereas truck is always a straight line, intermodal has three distinct segments. Terminal location and schedules determine the effective rail market area. Having to dray in the opposite direction of the freight is a challenge. For instance, cargo out of Cedar Rapids is trucked east to Chicago to go west to Los Angeles.

The final factor is how the load and customer interface are configured and its impact on drayage. A 2,000-mile length of haul will entail 72 to 96 hours for a single driver, who may well be sleeping in their truck when hours of service expire, while a drayage move is only three to five hours.

Considered as a percentage of their transaction time, multiple hours spent at the dock may be acceptable to the truck driver but not the intermodal drayman. The same intermodal obstacle applies to multiple stops. And in some cases, the multiple stops may be extended over hundreds of miles.

Intermodal’ s sweet spot is a single-stop drop-and-hook move. Live loading(“ stay with”) is more problematic for the drayage driver, and“ first come-first served” is even more dreaded. This reduces the addressable market suitable for conversion.

There is no doubt that fuel prices will help intermodal volume; however, the successful operators will be those that recognize intermodal’ s strong suits and play to them. Customers looking for truck alternatives will find collaborative ways to make their cargo work for intermodal. That will ensure a growth future.

email: ted @ tricitiesintermodal. com

52 Journal of Commerce | May 4, 2026 www. joc. com