Intermodal contract rates on transcontinental lanes leaving Los Angeles are running more than 12% above year-ago levels, according to FreightWaves SONAR data published in the outlet's November 7 Chart of the Week.

Rates on shorter Eastern intermodal lanes are up close to 9% year over year. Both indices are built from invoices that include fuel surcharges, and FreightWaves market analyst Zach Strickland wrote that fuel accounts for most of the recent gains. Based on how closely the indices have followed diesel, fuel explains roughly two-thirds of the transcontinental increase and three-quarters of the Eastern increase. With fuel removed, transcontinental rates are up about 5% and Eastern rates about 2%.

Because invoice data trails freight movements by a few weeks, diesel price changes appear in the indices with a delay. The analysis tied two jumps over the past year to fuel. A roughly 50% rise in diesel prices in March and April was followed by a 6% increase in the transcontinental contract index from April to May, and a roughly 36% diesel increase from July to September preceded a 10% gain in the index from August to October.

Intermodal contracts are typically negotiated on annual cycles, with most resetting near year-end. J.B. Hunt, which operates a large intermodal business, reported securing only low single-digit increases in the bid season that ended in September.

Intermodal remains priced well below truckload. The SONAR Intermodal Contract Savings Index, which compares rates on comparable truckload and intermodal lanes, still shows a 30% savings for intermodal, down slightly from a peak of 33% in June. FreightWaves reported intermodal volume growth running at about 7% annualized despite recent disruptions, including a BNSF washout in New Mexico and a CSX technical outage.

Source: FreightWaves -- https://www.freightwaves.com/news/intermodal-rates-coming-in-hot-this-fall-mostly-fuel-driven