As contract truckload rates drop, intermodal shippers are saving less on rail contracts than any time since 2016. Intermodal rail shippers should pay close attention to the contract market as truckload pricing is becoming more competitive. In October, after a three quarters of fluctuating truckload and intermodal rates, truckload rates declined 5 cents sequentially to $1.70 as spot intermodal rates rose to $1.62. Railroads will need to be careful about pricing intermodal services in 2020; Intermodal lost business to trucking because railroads were too aggressive on 2019 pricing. If railroads price too high, the drop-off in volume may continue should truck rates remain muted until next summer. If railroads price too low, they jeopardize the low operating ratios that investors are expecting.

Click the link below for more information:

JOC: JOC Research Note: Spot intermodal savings rising; contract tightening (Ari Ashe, November 5, 2019). 

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