In 2016 direct intermodal import rail routings declined, while total imports grew. This is termed by some in the logistics industry as the “Divergence of 2016”. Specifically, last year saw imports into the US grew by approximately 2%, all-water services to the US grew 4%, and direct import intermodal rail routings declined by .02%. Transloading, or transferring the contents of 40-foot marine containers to 53-foot domestic truck trailers or domestic rail containers for inland routing at or near the import port, has increased.
There seem to be a couple of reasons for this recent divergence:
- The lingering hangover effect from 2015’s labor contract strife on the US West Coast
- New ocean container carrier deployments favor East Coast services with transit times that compare favorably to West Coast services
However, this phenomenon is not just a recent blip, but appears to be a trend that has continued for some time. Consider the following comparisons of how long- distance routings of total imports have been handled:
In 2001: Direct Intermodal @ 47% vs. Transload @ 32%
In 2015: Direct Intermodal @ 37% vs. Transload @ 42%
The shift in handling mode may have more to do with inventory management costs rather than transport costs, in that transloading offers more flexibility in directing inventory compared with direct intermodal rail, particularly with meeting the competitive challenges of E-commerce fulfillment centers. As an example, as of 2016, Amazon was the second-largest shipper of 53-foot trailers in Southern California. Ocean carrier customers want to be able to direct and re-direct freight more fluidly to multiple distribution centers rather than to one distribution center for faster “last mile” service; this also works in favor or transloading.
Furthermore, the trend to bigger container ships and bigger terminals means larger cargo flows and volume surges, so if inland rail terminals cannot accommodate these surges, then this may also feed the transloading trend. Another complication is that although ocean carrier consolidation means that the carriers can build larger intermodal block trains into their ocean routing service designs, this ability is hampered by the fact that current terminal configurations have not kept pace with changing carrier alliances and consolidations. Until the container terminal configurations catch up with the carrier trends, the direct on-dock intermodal operations are less than ideal.