The intermodal surge that occurred in the third quarter was of historic proportions. But not every intermodal region-pair shared equally in the bounty. A close examination of the data reveals some surprises.
Overall intermodal revenue moves, as measured by the Intermodal Association of North America (IANA), increased over 17 percent from Q2 2020 to Q3. Movements of domestic equipment (domestic containers and trailers) moved up over 21 percent, while Inland Point Intermodal (IPI, the movement of intact ISO containers) registered a smaller but still robust gain of almost 14 percent. Within those two sectors, where did the growth occur? What region-pairs were winners, and which were the losers?
Table 1 examines the domestic intermodal situation. The top 10 pairs by Q2 2020 volume are listed, while the remaining 43 lanes are combined. For each lane, we calculate the change in loads, both in terms of units added and the percentage change. We then look at each lane’s share of total growth. Finally, we look at each lane’s share of Q2 2020 volume. If the rising tide was equally shared across the board, then each region-pair’s share of the volume gained should have been equal to its share of the Q2 volume. But that wasn’t the case.
Some lanes over-performed, accounting for more than their share of new volume, while others lagged. Lanes which show a larger share of the gain from Q2 to Q3 than their share of the Q2 total domestic volume were punching above the weight class. Those lanes which under-performed accounted for a smaller portion of the gains than their volume would lead us to expect.
Secondary lanes saw biggest percentage gain
From Q2 to Q3, domestic intermodal volume grew by approximately 426,000 loads. Much attention has been focused on the volume flowing out between California and the Midwest. Indeed, Midwest-Southwest was the region-pair with the biggest absolute gain. Some 74,000 more units were moved in Q3 versus Q2. But given that in Q2 a full 20.2 percent of all domestic intermodal activity took place in this lane, this 17.3 percent actually was a bit of an under-performance. In fact, of the 10 major lanes, only three were, by this measure, overperformers. Further, the biggest gain, in percentage terms, was registered by the secondary lanes. These lanes accounted for less than 21 percent of domestic intermodal volume in Q2, but over 26 percent of the improvement going into Q3.
Table 2 performs the same analysis on the IPI sector. Here the results are more conventional. Four of the top five lanes performed strongly, with only the Canadian trans-con volumes lagging. Collectively they accounted for 67 percent of the gain, considerably higher than their 58 percent share of Q2 volume. Intra-Mexico also showed a strong performance, but the outsized 11 percent share of total improvement may be more due to volatility from intermittent line blockages than intrinsic growth.
This analysis has possible implications regarding the durability of the surge. The broad reach of the domestic intermodal improvement is an encouraging sign. It indicates that the gains may have relied less on transloading and imports than might have been expected. Hence, even when the current import surge abates, the strength in domestic intermodal may endure.
Contact Larry Gross at lgross@intermodalindepth.com.