By Karen E. Thuermer, AJOT This year has been a good year for intermodal volumes. In fact, according to the Intermodal Association of North American (IANA), volumes continued to accelerate through 2010, posting an overall 17.2 percent year-over-year increase during Second Quarter (Q2) 2010. International growth at 20.9 percent, however, outstripped domestic growth at 16.4 percent for that time period. (See related article, “IANA Study Highlights Whopping Growth for Intermodal Transport.” The reason is there was a resurgence in U.S. container imports that boosted international container shipments. In fact, import volumes at major North American ports were up 23.1 percent in May, that last month for which complete data was available for the Second Quarter 2010 study provided by IANA. For example, the ports of Seattle and Tacoma were up 47.6 percent in the second quarter, while international intermodal originations in the Northwest were up 44.1 percent. Domestic container shipments certainly received a boost from the economic recovery, the IANA study indicates there is evidence that rail has gained share from trucks. IANA believes this trend should continue and domestic container shipment growth should continue to outpace overall economic growth. More Competitive
The success of intermodal is perhaps one of the bigger stories impacting transportation options. But with this success has come a more competitive environment surrounding the industry. “While intermodal has always been good at transcontinental shipments over 2000 miles in length, we are now finding that it is possible to be competitive with highway options with containerized services down to 700 miles,” says David Howland, vice president of Land Transport Services for APL Logistics and vice chairman of IANA’s Board of Directors. Howland expects the widening of the Panama Canal in 2014 also will potentially have a greater impact on the international side of the business than the domestic side. “But no one is sure, yet, of what we will actually see,” he says. Rates, Capacity Issues While intermodal volumes appear to be firing on all cylinders, the global recession has impacted the industry in other ways. According to Howland, the industry is now facing challenges related to rates for both truck and intermodal transport. That’s because during the downturn, third party logistics operators (3PL’s) reduced rates to compete with falling truck rates. “In the mean time, the railroads were trying to hold onto hard won rate increases,” he says. The result was a downsizing of not only truck capacity, as carriers shed fixed costs, but also drayage capacity. With the up tick in traffic in 2010, carriers, including the railroads, have raised rates. Consequently, 3PL’s, such as APL Logistics, and their intermodal partners have had to find ways to handle the capacity issue. Howland explains that APL Logistics has been looking for alternative sources, with additional capacity coming from highway operations with additional truckload carriers entering the market to fill the gap. To summarize, Howland points to capacity issues, rising rates off the West Coast, and the reduction in service offerings as the top three biggest concerns APL Logistics’s customers face today regarding their shipping options. To address these concerns, Howland reveals that APL Logistics will be expanding its asset based position in the domestic market to increase the box supply and add an additional option to its customers. This program is in development, however, and not ready for discussion.
Howland was appointed to his position at APL Logistics in May 2010 where he concentrates on expanding APL Logistics North America domestic transport capabilities, focusing on land-transport services and the link between customers’ international and domestic cargo movements. “We’re moving forward to re-position APL Logistics in the domestic intermodal markets and in building greater coverage in our la