Intermodal Spot Rate Pricing Trendline Analysis
Weekly discussion and analysis on the trends in the intermodal spot rate market.
The InTek intermodal spot rate index increased 2.7% from the prior week.
For the week of May 26, 2020, domestic intermodal spot rate index:
- Up 2.7% from prior week.
- Down 0.3% from 90 days ago.
- Down 10.3% from prior year.
Lane Stats: 52.6% increased, 5.2% decreased and 42.2 went unchanged.
After seven consecutive weeks where domestic intermodal spot rates decreased, this week marks the first week of an increase in the overall spot rate index.
The primary reason for the increase comes from the heavily weighted outbound SoCal market where the average spot increase came in at 4.6%, while the Los Angeles to Chicago lane jumped 15%. The combination of the ports turning on volume from the re-opening of the US economy and the California produce season are the drivers in the change.
Even with the change in the spot rate direction this week, the cards remain stacked against the potential of intermodal spot rates sustaining these types of increases any time soon, as the headlines against domestic intermodal include:
- Trucking spot market is very competitive.
- Excess 53' capacity to compete against.
- Class I railroads are more inclined to ride out the market with their strong balance sheets, then compete on rates. This is a significantly different model than trucking because the vast majority of truckload capacity (97.3%) comes from motor carriers with less than 20 trucks, which depend on a continuous flow of business to keep food on the table.
- Ocean carriers continue to cancel books and intermodal keys on import traffic with the largest intermodal lane being LA to CHI.
- Overall freight market is in a recession and intermodal will be the last segment to recover.
North American intermodal volumes continue to be weak against prior year.
YTD 2020 volume is down 10.2% from prior YTD.
Breaking the volume down by equipment, TOFC is down 24.2% and COFC is down 9.1%.
By region, volume is down 11.3% in the US, down 6.7% in Canada and down 5.5% in Mexico.
Comparison of Truckload to Intermodal Spot Rate
The national truckload spot rate increased 4.8% last week, as reported by the DAT Trendline Report.
The spread in the year-over-year national truckload average rate per mile and intermodal spot rates remain in favor of intermodal, with truckload spot rates down 9.5% and domestic 53' intermodal down 12.5%.
Diesel Fuel Comments:
The EIA reported average diesel fuel price of $2.390 per gallon this week, which is up $0.004 per gallon from the prior week.
The diesel price per gallon is down $0.761 or 24.2% from the same period last year.
After an incredible rally in WTI and Brent both oil grades backed off their steep increases this week to trade in the range of $32.75 and $34.35, respectively.
Oil's strength is based more on the belief / hope that as the economy opens back up there will be an increased demand to better balance production and demand than on actual demand, as it remains extremely low because of a global economic downturn driven by COVID19.
The EIA's May 2020 diesel price average price projection is $2.37 per gallon for calendar year.EIA's most recent projection for oil took a big dip from February's projection:
- WTI - $30.10
- Brent - $34.13
The full spreadsheet of the historical weekly price moves of diesel full can be found at https://www.eia.gov/petroleum/gasdiesel/.
Intermodal Spot Rate Trend Graphs
53' Domestic Intermodal Price Index & Diesel Fuel Prices
Variance to January 1, 2013 Baseline
Rolling 52 Year-over-Year Comparison - 53' Domestic Intermodal and Diesel Fuel Prices
Rolling 52 Year-over-Year % Change - 53' Domestic Intermodal and Diesel Fuel Prices
53' Domestic Intermodal and Diesel Prices Quarter-Over-Quarter Comparison