In a year in which one strange event has followed another, anything seems possible and normalcy seems to be far away. When 2021 is over, the US intermodal industry may look back and say, “What happened to the fall peak season?”

There are two main ingredients to the traditional peak season: a seasonal increase in demand and an increase in the number of TEU processed. Both are in question in 2021.

Seasonality thus far in 2021 has been abnormal to say the least. The typical post-Lunar New Year decline in US imports, for example, was missing in action, replaced instead by a continual high tide of volume.

Chronic disruptions and capacity constraints have greatly delayed cargo arrivals, which raises a question: How much of the recent “pre-peak” strength has been the result of shippers trying to move cargo earlier in anticipation of further delays? In other words, could some of the recent strength actually be due to volume borrowed from what would normally have moved later in the year, during peak season?

US containerized imports typically peak in August. In a “normal” year, the number of import TEU entering US and Western Canadian ports in August is about 6.2 percent higher than in June. But US ports were seemingly running at capacity in June, so is it reasonable to expect their operations to flex up in July and August? Furthermore, even if the ports could unload the containers, wouldn’t that simply shift the bottleneck to the inland transport providers?

Shippers moved around 822,000 containers via inland point intermodal (IPI) in June, approximately 38,000 per working day. Revenue moves per day in June were 6.9 percent below what was achieved in May. With containers stacked up waiting to move on all coasts, this was clearly the most that the system, in its current impaired state, could manage. In a normal year, IPI volume would peak in September at a rate about 3 percent above May. That would require an increase of somewhere in the 8 to 10 percent range from June, which is not very likely.

Domestic intermodal is another story. In June, domestic revenue loads came in at 763,000, according to data from the Intermodal Association of North America, down 7.7 percent from March. In a normal year, June volume would have been about 1 percent above March. Equipment constraints accounted for the shortfall, according to carriers. Plunging equipment velocity has chewed up precious capacity, resulting in only 35,000 revenue moves per day. The peak pace last year occurred in October, with over 39,000 revenue movements of domestic equipment per working day. Domestic intermodal revenue moves per day will need to increase by more than 10 percent just to match last year’s results.

Given these figures, it seems more likely that we will see a plateau this fall than a peak.

What happens after the plateau depends on how much of the current strength has been due to freight moving earlier than normal. If the percentage is significant, then we might expect to see a more rapid decline in volume during the winter months. The effect of such a decline on the North American intermodal system will be muted, however, by the large reservoir of freight that will still be floating offshore awaiting port access. It is likely that the system will not get any significant breathing room until the second quarter of 2022.

In the longer run, there is no reason to believe that the market fundamentals that were in place prior to the COVID-19 pandemic have been displaced. At the very least, we can expect a return to the previous norms.

The headaches that shippers have experienced in 2021 will take further shine from the offshoring concept. Growth rates for imports will trail that of GDP. With substantial capacity promising to come online, 2022 may find the balance of power shifting back from the carriers to the shippers. For the carriers that have been most aggressive in the treatment of their customers during this current surge, things could get mighty uncomfortable mighty fast.

Contact Larry Gross at lgross@intermodalindepth.com.