Domestic intermodal demand is running 10 percent above last year, while long haul truckload tender volumes have stayed flat, according to SONAR data from FreightWaves. The two modes have moved in opposite directions since mid July, with truckload demand falling faster than the season typically calls for.

Long haul tenders, defined as loads moving more than 800 miles, are the segment most easily shifted to rail, and that is exactly where shippers appear to be sending freight. Total tender volumes are up 6 percent year over year over the past week, but long haul tenders are the only segment without annual growth.

The pricing gap explains the shift. Truckload contract rates from Chicago to Elizabeth, New Jersey are up 31 percent including fuel, compared with a 5 percent increase for intermodal on the same lane. On the Atlanta to Elizabeth lane, truckload contract rates have climbed nearly 60 percent, versus just 6 percent for intermodal.

Chicago remains the largest domestic container market in the country and has grown 9 percent compared with last year. Los Angeles, the main import gateway, has grown only 3 percent, while Atlanta, fed by both Savannah and Los Angeles containers, has posted growth of more than 20 percent in domestic container volumes.

Analysts note the spread between modes is unlikely to hold. Rail carriers have room to raise intermodal rates well into the double digits and still undercut truckload pricing, though a pending rail merger could keep some rates in check until regulators rule on the deal. Intermodal's traditional peak season in September and October has not yet arrived.

Source: FreightWaves - https://www.freightwaves.com/news/modal-shift-dampens-trucking-market