Startup licenses ORNL technology for converting organic waste to hydrogen
DOE researchers develop energy-efficient, cost-effective process to extract rare earth elements from scrapped magnets

IHS Markit: railroads continue to lose price advantage over trucking

US railroads experienced a further deterioration of their price advantage for domestic intermodal shipping compared to trucking in the second quarter, according to a new index by global business information provider IHS Markit. This latest contraction in the domestic intermodal pricing edge continues a trend that began in the first quarter of 2018.

The dwindling pricing advantage means that there is less financial incentive for shippers to transport cargo “intermodal”—that is via rail, where it is onloaded and offloaded by trucks—rather than just utilizing trucking for the entire length of the trip. Shippers compare transit times, on-time performance, and total cost between intermodal (truck and rail) and just trucks when deciding how to move their freight.

The new US Domestic Intermodal Savings Index produced by IHS Markit’s JOC shows that US domestic intermodal shippers do not save as much by converting loads from the highway to the rails as in recent years. Trucking services have been more competitive on lanes under 2,000 miles, the index shows.

The release of the quarterly index comes as US railroads face slowing freight growth and US trucking spare capacity increases, creating a new buying dynamic for US shippers moving goods via 53-foot containers and trailers.

The index is produced by JOC, part of the Maritime & Trade business at IHS Markit. The index is available to JOC.com and The Journal of Commerce magazine subscribers.

The new index uses a base of 100. Values above that mark mean that intermodal spot rates are cheaper. When the index is below 100, that signifies that truckload spot rates are cheaper.

Through the first half of 2019 the index is 106.7. Spot intermodal rates have gradually declined since 2015. The index even dropped below 100 on a national basis between August 2018 and October 2018 as intermodal spot market rates shot up higher than trucks in major markets across the country. Although the index has recovered since October, intermodal savings were still lower in the first two quarters compared with one year ago.

The new US Domestic Intermodal Savings Index utilizes a proprietary JOC data set of intermodal and truckload rates through partnerships with various third-party logistics companies and shippers. The truckload information consists of the average of actual invoiced prices issued to shippers in the prior month, rather than the rates paid to drivers.

The index evaluates 45 high-volume lanes in which intermodal and full truckload compete for shipper’s business. An additional 60 secondary lanes with both modal options are also tracked to develop a standard index value to facilitate conversations between shippers and their transportation partners about the best solutions for them.

The JOC is the historic Journal of Commerce shipping newspaper that is now a focused business intelligence unit within IHS Markit, concentrating on international containerized transportation and logistics, freight markets, technology and strategy.

Comments

Verify your Comment

Previewing your Comment

This is only a preview. Your comment has not yet been posted.

Working...
Your comment could not be posted. Error type:
Your comment has been posted. Post another comment

The letters and numbers you entered did not match the image. Please try again.

As a final step before posting your comment, enter the letters and numbers you see in the image below. This prevents automated programs from posting comments.

Having trouble reading this image? View an alternate.

Working...

Post a comment

Your Information

(Name is required. Email address will not be displayed with the comment.)