Truck load (TL) provider, Swift Transportation also noted strong intermodal growth and announced it would add 2,000 intermodal containers in the second half of 2012 to pursue further opportunities. JB Hunt reported a 13% increase in both intermodal revenue and volume. In fact, 60% of its total revenue is derived from intermodal services.
So, what’s behind this growth? As noted in the previous Ti briefing, “Growth forecast for trucking may be optimistic”, among the reasons for the growth include high congestion and truck driver shortages, conversion of boxcar traffic and investments in rail networks. This investment in rail networks has particularly paid off for the Class I railroads, especially in the Eastern US. CSX and Norfolk Southern have invested in intermodal corridors such as National Gateway which connects the East coast ports to the Midwest and the Crescent Corridor which connects the Southeast to the Northeast markets.
Recently, South Carolina’s Port Authority announced plans for an upstate inland port. In conjunction with Norfolk Southern, the estimated $23m project would ease congestion on the state’s crowded interstate system as well as container buildup at the Port of Charleston. The inland port would be located near the Greenville-Spartanburg International Airport, BMW North America manufacturing plant, Michelin and Adidas facilities.
Just up the road in Charlotte, North Carolina, Norfolk Southern recently broke ground on another such facility. The 200-acre intermodal hub, next to the Charlotte Douglas International Airport is expected to open late 2013. “Charlotte is a key hub on the Norfolk Southern intermodal system and on our Crescent Corridor, a new rail intermodal network under development stretching from New Jersey to Memphis and New Orleans,” says Wick Moorman, chief executive of Norfolk Southern. “This facility will greatly expand our ability to handle intermodal traffic and move more freight off the nation’s overburdened highway system and onto the rails.”
The growing intermodal hub networks appear to be a transportation option many shippers are taking advantage of. For second quarter, rail intermodal loads increased 4% and for the first half of 2012 intermodal loads were up 3.3%. The second half of 2012 is a bit questionable as possible signs of an economic slowdown may slow domestic intermodal rail growth.