2018-11 Northwestern University · Gross Transportation Consulting 6 NORMAL AUGUST INBOUND PEAK...

INTERMODAL OUTLOOKNorthwestern University

Transportation Center BAC

Meeting

November 8, 2018

Larry Gross:President

Gross Transportation Consulting

516-455-8988

[email protected]

@Intermodalist

Good Morning!

Gross Transportation Consulting 22

GROSS TRANSPORTATION CONSULTING

� Solo practice covering surface freight transportation sector

� Primary focus on intermodal

� Monthly subscription product with weekly updates

� Market analysis and project work

� www.IntermodalinDepth.com


THE TWO WORLDS OF INTERMODAL

50.6%49.4%

Domestic International

Includes:• Domestic Containers

(53’, a few 48’)• Trailers• Transload Cargo

Affected by:• Competitive

economics with truck• Truck capacity• Fuel Prices• Transload trends

Includes:• ISO Containers (20’,

40’, 45’)

Affected by:• Trade stats• Port routings/Import

strategies• Steamship line

policies• Truck competitiveness• Transload trends

Each sector responds to very different market forces

Copyright 2018 GTC


INTERMODAL IS HAVING A GOOD YEAR

Source: IANA ETSO, GTC Analysis, Copyright 2018 GTC

Y/Y %

Change2016 2017

YTD

2018

Grand Total -2.1% +4.7% +6.0%

International -3.3% +6.2% +5.4%

Domestic -0.7% +3.2% +6.7%

Domestic

Container4.1% +2.7% +5.4%

Trailer -22.1% +6.3% +14.8% 700

725

750

775

800

825

850

875

900

1,400

1,450

1,500

1,550

1,600

1,650

1,700

1,750

1,800

Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep

North America Rev. Moves/Mo - Actual (000's)

Total (Left Axis)

International (RightAxis)

Domestic (Right Axis)


OCTOBER HAS GOTTEN OFF TO A SLOW STARTSEASONAL PEAK MIA?

Source: AAR, Copyright 2018 GTC

-2%

0%

2%

4%

6%

8%

10%

12%

14%

250

275

300

325

350

375

400

Th

ou

san

ds

North America Total Intermodal Originations

Weekly

Y/Y% Change Originations per Week


NORMAL AUGUST INBOUND PEAK CAME EARLY THIS YEAR

Sources: IHS Markit PIERS, Port Reports, GTC Analysis

1,000

1,200

1,400

1,600

1,800

2,000

2,200

2,400

2,000

2,500

3,000

3,500

4,000

4,500

North America Loaded TEUs (000)

Total (left) Inbound (Right) Outbound (right)

-10%

-5%

0%

5%

10%

15%

20%

North America Loaded TEU's - Y/Y Change

Total Inbound Outbound


INTERMODAL IMPORT PARTICIPATION HAS DECLINED LATELY – WEST-TO-EAST SHIFT MAY BE RESPONSIBLE

Sources: IANA ETSO; IHS Markit PIERS Data, Port Reports, GTC Analysis, Copyright 2018 GTC

Inbound TEUs YTD 2018

North America +4.9%

US West Coast +3.0%L.A./Long Beach +3.0%

Northern California +3.1%

Pacific Northwest 2.2%

US East/Gulf Coasts +7.1%Northeast +6.3%

Southeast +7.6%

Gulf +9.2%

Western Canada +2.9%

0.70

0.72

0.74

0.76

0.78

0.80

0.82

0.84

0.86

0.88

0.90

IPI + SoCal Transload TEUs vs. Import TEUs


DOMESTIC CONTAINER HAS BEEN CAPACITY LIMITED, TRAILERS HAVE HELPED FILL THE GAP

Source: IANA ETSO, Copyright 2018 GTC

The rail-owned domestic container fleet has had productivity problems. 53’ TOFC has helped fill the gap.

90

95

100

105

110

115

120

Oct'17

Nov'17

Dec'17

Jan'18

Feb'18

Mar'18

Apr'18

May'18

Jun'18

Jul'18

Aug'18

Sep'18

Revenue Moves per Working Day: 2016 Avg. = 100

Private DomesticContainer

Rail OwnedDomestic Container

60

65

70

75

80

85

90

95

100

0%

5%

10%

15%

20%

25%

30%

Oct'17

Nov'17

Dec'17

Jan'18

Feb'18

Mar'18

Apr'18

May'18

Jun'18

Jul'18

Aug'18

Sep'18

53' Trailer Movements

Y/Y Change (Left)


INTERMODAL SERVICE CONTINUES TO BE PROBLEMATIC

Sources: STB Reports, GTC AnalysisCopyright 2018 GTC

28.0

28.5

29.0

29.5

30.0

30.5

31.0

31.5

32.0

32.5

33.0

33.5

34.0

1 5 9 13 17 21 25 29 33 37 41 45 49

4 W

eek M

ovin

g A

vera

ge IM

Tra

in S

peed -

MPH

Week

4-Week Avg. Intermodal Train Speeds - Total Network

Average Last 5 Years 2016 2017 2018

=

-3.8%

-6.6%

-4.2%

-7%

-6%

-5%

-4%

-3%

-2%

-1%

0%

Vs. Prior Year Vs. 2 Years Ago Vs. 5-YearAverage

Average Intermodal Train Speeds -Current 4-Week Avg. vs. Previous


• Renewed emphasis on core lanes

• Focus on efficiency (PSR = Longer trains, reduced sorting

• Retreat (with exceptions) from steel-wheel interchange at gateways

• Reduction in service linking secondary, low-volume points

THE INTERMODAL NETWORK IS BEING RE-ALIGNED


DESPITE TIGHT TRUCK CAPACITY INTERMODAL MARKET SHARE HAS FALLEN FOR TWO QUARTERS

*Long Haul = 500 miles or more

Sources: IANA ETSO, Transport Futures, GTC AnalysisCopyright 2018 GTC

10.5%

11.0%

11.5%

12.0%

12.5%

Long Haul* Dry Van/Reefer FreightU.S. Total Intermodal Market Share

Total Intermodal

4Q Moving Average

5.5%

6.0%

6.5%

7.0%

U.S. Long Haul* Dry Van/Reefer FreightShare Moving in Domestic Intermodal Equipment

Domestic Intermodal

4Q Moving Average


INTERMODAL MARKET SHARE VARIES WIDELY BY MILEAGE RANGE

0%

5%

10%

15%

20%

25%

30%

35%

40%

251-500 501-750 751-1000 1001-1500 1501-2000 2001-2500 >2500 Total >500 Total >250

Domestic Intermodal U.S. Market Share

Sources: IANA ETSO, Transport Futures, GTC AnalysisCopyright 2018 GTC


DRAYAGE DEMAND INDEX SHOWS CONDITIONS STILL TIGHT BUT BETTER THAN THEY WERE

Sources: Drayage.com, GTC Analysis

197

0

50

100

150

200

250

300

350

Drayage Demand Index - Major Markets - 100 = Average


• Fall Peak: • Moderating international gains

• Constrained domestic container growth due to fleet capacity issues – concentrated on the rail-owned domestic container fleet

• TOFC volume stays strong

• 2019• International gains continue at a moderate pace

• Considerably more challenging competitive conditions vs. truck

• Rates stabilize but gains slow significantly

NEAR-TERM OUTLOOK


• Trade war with China? About 65% of all intermodal volume relates to import/export trades (excludes NAFTA!)

• Service Concerns. It’s not about speed, it’s about service reliability and consistency

• Autonomous Trucks? Fully autonomous operation is a red herring that’s many years away. But semi-autonomous operations (platooning) is a more relevant technology to watch.

LONGER-TERM OUTLOOK

INTERMODAL OUTLOOK

Larry Gross:President

Gross Transportation Consulting

516-455-8988

[email protected]

@Intermodalist

Thanks!

Northwestern University

Transportation Center BAC

Meeting

November 8, 2018

2018-11 Northwestern University · Gross Transportation Consulting 6 NORMAL AUGUST INBOUND PEAK...

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