Coming down the track

Intermodal providers readying for Southern California volume uptick

Intermodal PSSs reflect demand that is stronger than in 2023 but still well below pandemic levels . Shutterstock . com

By Ari Ashe

Intermodal providers are positioning personnel and containers in Southern California ahead of a peak season bump in demand that , while higher than last year , will be more on par with pre-pandemic norms .

J . B . Hunt recently hired 500 drivers and is flying more to the West Coast to fill their trucks .

“[ Since ] really the end of the second quarter , we saw demand trends normalizing , trends that we haven ’ t seen since 2019 and , based on conversations with our customers , those trends should continue this fall ,” Spencer Frazier , executive vice president of sales and marketing , told the Journal of Commerce . “ J . B . Hunt is adapting our network to support the growing demand on the West Coast , which includes bringing in new drivers and shifting capacity and assets to meet the anticipated surge .”

Domestic container traffic originating from Southern California increased 13 % year over year in June and 11 % in July , according to a Journal of Commerce analysis of data from the Intermodal Association of North America ( IANA ). Across North America , total domestic intermodal volumes rose 1.3 % and 9.7 %, respectively .

“[ We ’ re ] seeing an uptick in demand from many customers ,” Brian Meents , president of Hub Group intermodal , told the Journal of Commerce . “ It is looking positive and better [ for the company ] than in years past .”

Hub Group has increased staffing and capacity at its transloading facilities in Southern California to handle the rising demand .

The rise in domestic intermodal demand is linked to the uptick in ocean cargo at Southern California ports this spring , leading to more transloading activity in June and July . Still , despite an early peak at the ports , intermodal providers expect elevated domestic business through October .

Room for rates to rise

Union Pacific Railroad ( UP ) and several other assetbased intermodal providers , including J . B . Hunt , Hub Group , Schneider National and Swift Intermodal , are responding to the heightened demand by imposing peak season surcharges ( PSSs ) ranging from $ 250 to $ 1,200 per container on outbound shipments from Southern California that exceed a shipper ’ s weekly contractual allotments .

The size of the surcharges — most are less than $ 500 per container — reflects underlying domestic intermodal demand that is stronger than last year but still well below the levels seen in 2020 and 2021 , when providers imposed PSSs of up to $ 5,000 per box .

UP , for example , will charge customers with shipperspecific contracts an additional $ 300 per container in Southern California and low-volume shippers $ 500 per box , starting Sept . 1 , amid increased demand for railowned “ EMP ” and “ UMAX ” containers . Intermodal providers will also raise spot rates for shipments using rail-owned containers on Sept . 1 to prevent shippers from attempting to sidestep their contractual agreements .

“ Demand for Union Pacific ’ s container fleet is strong , and we ’ re taking aggressive steps to unstack containers , reposition empties and run extra trains , all aimed at delivering consistent service to support our customer ’ s volume needs ,” Kari Kirchhoefer , UP ’ s senior vice president in

Gap between spot truckload , rail rates widening

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

USD per mile

$ 2.2

$ 2.0

$ 1.8 1.0

$ 1.6

$ 1.4

$ 1.2 L Jan 2023

Jul Jan 2024

Spot Truckload Shipper Rates

Notes : Rates reflect an average of the same 120 lanes in truckload and intermodal rail .

Source : Intermodal Savings Index

Spot Intermodal Shipper Rates

Jul

52 Journal of Commerce | September 9 , 2024 www . joc . com

September 9, 2024 | Page 52

Coming down the track