Intermodal provides low-cost storage option for shippers
Chart of the Week: Loaded Rail Container Volume, Outbound Tender Volume Index – USA SONAR: ORAILL.USA, OTVI.USA
Time has been of the essence over the past year as demand for goods outstripped supply, forcing shippers to order more than they needed. Now that consumer demand is waning, companies find themselves with more inventory than they can handle. The national Outbound Tender Volume Index (OTVI) has dropped 12% over the past year and 14% over the past month while loaded intermodal volumes (ORAILL) are trending higher. Could shippers be using the bottlenecks around ports and railheads and a slower transit time from intermodal to decrease their inventory costs?
There is no denying that intermodal is not experiencing the same decline in demand as its truckload counterpart. Even though these two modes tend to move in relative sync with each other, that has not been the case for most of the past year.
Weekly loaded intermodal volumes dropped roughly 8% from May 23 to the end of August while trucking tender volumes were relatively flat. Although much of this decline in demand had to do with overall service, it did not necessarily have to do with the transportation on the rails.
In July, Union Pacific shut down service from Los Angeles to Chicago due to container congestion around the rail ramps and yards. Drayage service and equipment shortages were cited as driving factors. Many…
