CENTRO INTERNAZIONALE STUDI CONTAINERS
ANNO XXXVIII - Numero MAGGIO 2020
INTERMODAL VOLUMES WILL TAKE MONTHS TO IMPROVE, PANEL
Intermodal volumes could start to improve around the fourth
quarter of 2020 or the first quarter of 2021, but uncertainty
surrounding the coronavirus pandemic makes any volume forecast
dicey, said a trio of panelists at Wolfe Research's Global
Transportation and Industrials conference on Tuesday.
"You have some really big factors that aren't normal
items," and it's not just an economic issue but a biological
one, said Jim Filter, Schneider National (NYSE: SNDR) senior vice
president and general manager of intermodal.
Filter was part of the panel, along with Phil Yeager, president
and CEO of the Hub Group (NASDAQ: HUBG), and Darren Field, president
of intermodal of J.B. Hunt Transport Services (NASDAQ: JBHT).
Forecasting intermodal demand is challenging under existing
conditions; in the near term, intermodal volume growth will largely
depend on how consumer demand affects economic activity, panelists
said. Although volumes at key ports on the East and West coasts are
anticipated to be lower in May and June because of canceled
sailings, some in the intermodal sector are using consumer
confidence and retailer demand as gauges for how intermodal activity
might fare the remainder of the second quarter.
"I don't anticipate [imports] becoming any worse but I'm
also moving on assumptions and forecasts we're getting from our
customers," Field said.
There are three to four conditions needed to grow intermodal
volumes, according to Field: tightening truckload capacity,
competitive fuel pricing and reliable rail service. A fourth factor
that some customers care about is the intermodal sector's carbon
footprint, Field said.
With the truckload market facing pricing pressure from loose
capacity and low fuel prices reducing transportation costs, the bid
season has been "going as expected," panelists said.
Truckload prices are at a 15% discount in most lanes, with longer
lanes experiencing even steeper discounts.
But while this pricing might seem attractive to shippers,
shippers are also considering what their long-term capacity needs
are as they navigate pricing discussions with intermodal partners,
Although the railroads have said they won't come down on pricing
for intermodal, the railroads also don't want to lose market share,
"At the end of the day, we are in a competitive business.
... [I]n order to bring in new opportunities, I think the railroads
have to participate somehow," Field said.
As the COVID-19 pandemic eventually abates and the U.S.
considers nearshoring and onshoring as a means to diversify supply
chains, intermodal stakeholders stand to benefit from increased
manufacturing and production coming from Mexico, panelists said.
Manufacturing costs will be a factor in whether companies pursue
nearshoring or onshoring opportunities, and shifting manufacturing
to Southeast Asia from China could affect which U.S. ports will see
increased activity, Yeager said. But intermodal stakeholders stand
to benefit should more production move to Mexico, he said.
E-commerce is also a significant growth opportunity for
intermodal because intermodal partners will still be needed to bring
inventories close to population centers, according to panelists..
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