What Is Rail Intermodal, and Why Is It Growing so Fast?

What Is Rail Intermodal, and Why Is It Growing so Fast?

In today’s global economy, where countless tons of freight are on the move every day, rail intermodal is proving to be a key link in the transportation chain from producer to consumer. In the US in recent years, rail intermodal’s growth has skyrocketed—intermodal was the single largest source of revenue for US freight rail in 2014—and industry experts believe the trend is going nowhere but up as the global transportation industry rushes to keep up with the increasing consumer demands of the world’s growing population.

What is rail intermodal?

Rail intermodal is the long-haul transportation of truck trailers and shipping containers on railroad flat cars, often combined with a short truck movement at one or both ends. Providing an environmentally friendly and competitively priced alternative to excessive dependence on highways for freight transportation, intermodal allows railroads, trucking companies, ocean carriers, and freight customers to combine the best aspects of various transportation modes to move freight efficiently and cost-effectively.

Volume

Today, US rail intermodal volume is over four times greater than it was 35 years ago. In 1980, the volume stood at 3.1 million trailers and containers. That number grew to 5.9 million in 1990, 9.1 million in 2000, and 12.3 million in 2006. Though the volume declined sharply in the recession years of 2007-2009, it has since made an impressive rebound: a record-breaking 13.5 million trailers and containers were transported in 2014.

Revenue

Also in 2014, intermodal accounted for nearly a quarter (22%) of revenue for America’s major railroads. That is greater than the percentage contributed by any other single commodity group, meaning that for the first time in many years, coal was displaced from its long-held role as the largest single source of freight rail revenue.

Goods

In addition to agricultural and industrial products, such as grain and auto parts, a huge variety of everyday goods are transported by intermodal systems. Almost everything found on a retailer’s shelves, from computers and potatoes to furniture and greeting cards, is likely to have traveled on an intermodal train.

Exports and imports

Six or seven years ago, exports and imports accounted for close to 60% of US rail intermodal traffic. Today, that figure is closer to 50%. This decrease is due to the recent rise in domestic intermodal traffic, which has resulted from converting freight that was previously moved only by truck to rail intermodal.

Containers

Shipping containers accounted for 44% of intermodal volume in 1990. By 2014, that figure had more than doubled to a record 89%. Efficiency is a key factor here: unlike truck trailers, shipping containers can be doubled-stacked, which greatly increases efficiency and contributes to sufficient traffic density to ensure that rail intermodal costs remain competitive with all-truck freight movement. Furthermore, shipping containers are easy to transfer between ships and trucks, another factor that increases productivity.

Markets

Intermodal success depends on markets with large populations and extensive highway feeder systems; the biggest US intermodal markets are therefore the ones that share these criteria. In 2013, the Chicago area topped the list of intermodal traffic markets in the US with 5,669,000 containers and trailers handled; the LA and Long Beach area was second with 4,881,000 containers and trailers.

 

What is driving the growth of intermodal rail in the US?

A number of factors are contributing to the intermodal boom the US is currently experiencing.

 

Investments

The railroad industry has made huge investments in infrastructure, capacity, and operations in order to create the most advanced intermodal network in the world. These improvements include new or expanded inland and near-dock intermodal terminals to facilitate transfers, greater track capacity, and modernized locomotives and new intermodal car types. The breadth and scope of these investments are a testament to the seriousness of the rail industry’s commitment to meeting the capacity and service needs of customers by providing productive, reliable intermodal operations.

Fuel costs and emissions

Rail is well established as the most fuel-efficient way to transport freight over land: in 2014, one gallon of fuel moved one ton of freight an average of 479 miles. When compared with trucks, railroads are an average of four times more fuel efficient, meaning that rail is not only a far more cost-effective option in terms of fuel consumption than truck transportation, it also reduces greenhouse gas emissions by 75% from levels produced by truck-only freight movement.

Truck driver shortages

Finding and retaining long-haul truck drivers is an ongoing challenge for trucking companies, with many firms experiencing annual driver turnover rates of close to 100%. These shortages have a much smaller impact when rail intermodal is used.

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