MAJOR us truckers allied with railways, Hub Group, JB Hunt and Schneider National, are offering lower prices to keep freight on the rails, according to shippers and overland forwarders, reports IHS Media.
In response to a weakening American economy, a slackening of demand, stiff competition is coming from two sides - truckers offering lower rates, and container-holding forwarders with a glut of boxes seeking market share are set against non-asset forwarders.
The battle lines are also heating up ahead of Schneider National becoming an exclusive partner of the Union Pacific Railroad in January 2023. Schneider wants intermodal business on new routes available on UP's network, but JB Hunt wants to capitalise with more containers and space on the BNSF Railway.
Domestic intermodal demand is down 10 per cent by volume between March and September, according to the Intermodal Association of North America (IANA). Norfolk Southern reported its domestic loads fell four per cent year on year in the third quarter, while UP said its domestic volume fell three per cent and parcel shipments on intermodal trains plunged 16 per cent in the same period.
One intermodal shipper who did not want to be identified, said JB Hunt, approached his company last month after he began shifting intermodal loads to trucks.
'We've made the moves, gave lanes away to truckload, and now we've gotten the calls, mostly from our largest provider of intermodal, JB Hunt,' said the source. 'They've reached out and said, 'What's going on? Let us take a look.' We'll have to see what they come back with.'
A second intermodal shipper said he has not been approached by intermodal carriers yet, but knows it's just a matter of time for competition over his business to heat up.
'If I award the lanes to truckload carriers, intermodal carriers will come back to me in December or January to say, 'What can you do for me? I can do this now,'' the shipper said. 'It's just like how truckload guys came to me in August and September to say, 'What can you do for me? I can do something here. What will it take?''
Short-haul trucking is providing stiff rate competition in a way it hasn't in years. 'I've never been in a position in the last six or seven years of being able to make truck and intermodal compete against one another economically like it is right now,' said one forwarder. 'It used to be 800 miles or less, and now the pocket is growing to 1,200 to 1,500 miles.'
From Atlanta to Elizabeth, New Jersey, for example, an average intermodal contract is saving shippers about US$375 per container today, according to the JOC Intermodal Savings Index. If truckload contract rates fall eight per cent, and intermodal providers attempt to raise rates three per cent, then the rail option saves less than $100 per container.
DAT Freight and Analytics reports that truckload contract renewals with incumbent carriers are down eight to 15 per cent compared with prior deals.
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In response to a weakening American economy, a slackening of demand, stiff competition is coming from two sides - truckers offering lower rates, and container-holding forwarders with a glut of boxes seeking market share are set against non-asset forwarders.
The battle lines are also heating up ahead of Schneider National becoming an exclusive partner of the Union Pacific Railroad in January 2023. Schneider wants intermodal business on new routes available on UP's network, but JB Hunt wants to capitalise with more containers and space on the BNSF Railway.
Domestic intermodal demand is down 10 per cent by volume between March and September, according to the Intermodal Association of North America (IANA). Norfolk Southern reported its domestic loads fell four per cent year on year in the third quarter, while UP said its domestic volume fell three per cent and parcel shipments on intermodal trains plunged 16 per cent in the same period.
One intermodal shipper who did not want to be identified, said JB Hunt, approached his company last month after he began shifting intermodal loads to trucks.
'We've made the moves, gave lanes away to truckload, and now we've gotten the calls, mostly from our largest provider of intermodal, JB Hunt,' said the source. 'They've reached out and said, 'What's going on? Let us take a look.' We'll have to see what they come back with.'
A second intermodal shipper said he has not been approached by intermodal carriers yet, but knows it's just a matter of time for competition over his business to heat up.
'If I award the lanes to truckload carriers, intermodal carriers will come back to me in December or January to say, 'What can you do for me? I can do this now,'' the shipper said. 'It's just like how truckload guys came to me in August and September to say, 'What can you do for me? I can do something here. What will it take?''
Short-haul trucking is providing stiff rate competition in a way it hasn't in years. 'I've never been in a position in the last six or seven years of being able to make truck and intermodal compete against one another economically like it is right now,' said one forwarder. 'It used to be 800 miles or less, and now the pocket is growing to 1,200 to 1,500 miles.'
From Atlanta to Elizabeth, New Jersey, for example, an average intermodal contract is saving shippers about US$375 per container today, according to the JOC Intermodal Savings Index. If truckload contract rates fall eight per cent, and intermodal providers attempt to raise rates three per cent, then the rail option saves less than $100 per container.
DAT Freight and Analytics reports that truckload contract renewals with incumbent carriers are down eight to 15 per cent compared with prior deals.
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