Intermodal markets: Volatility out of L.A.

Intermodal volumes are improving, but they’re still double-digit percentages below 2019 levels, which was not a great year for the railroads. Because volumes are low and intermodal capacity is easy to secure, tender rejections are insignificant — intermodal marketing companies (IMCs) are taking all of the contracted freight they can get — and rates have remained stable and low.

Except for last week in Los Angeles, where intermodal spot rates on the vital lane to Chicago jumped 45 cents per mile. The big move was likely due to a confluence of tighter and more expensive trucking capacity in LA, lumpy intermodal demand, and an imbalance in available assets (containers).

Freight brokers buying and selling trucking capacity out of Los Angeles had complained for weeks that outbound truck rates were surging and compressing their margins. Although reefer was the tightest equipment type, dry van spot rates ran up 66% since the end of April, from a level comparable to intermodal to $1.86 a mile, comparable to other seasonal peaks in outbound LA truck rates. The return of truck/train competition in Los Angeles is certainly a healthy sign for freight markets.

It’s likely that intermodal spot rates will retrace much of this surge next week and settle down as IMCs secure more capacity, relocate assets and are able to normalize pricing. But trucking rates should hold up (LA outbound tender rejections are above 7%), which could set the stage for higher intermodal rates all along the West Coast.

Members Only

You have selected content that’s only available to members of FreightWaves Passport. As a member, you gain immediate access to the most in-depth and informative freight research available. It’s your gateway to continuing education.

Members also get:

  • Access to exclusive community dedicated to discussing the most important challenges facing freight.
  • Monthly and Quarterly Freight Market reports keeping you informed of industry trends.
  • 2 individual tickets to separate FreightWaves LIVE events throughout the year.
  • Much, much more!

Click below to learn more and sign up today!

Subscribe
Existing Passport subscribers log in above.