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Intermodal going through quantity headwinds from tariffs, financial uncertainty
A westbound Union Pacific stack practice overtakes a stopped Amtrak Sundown Restricted in Niland, California, on Feb. 28. (Picture: Invoice Stephens)
The one factor that’s sure nowadays, intermodal analyst Larry Gross says, is uncertainty.
And that makes it troublesome to whip up an correct short-term intermodal forecast, he informed an Intermodal Affiliation of North America webcast on Tuesday.
However Gross says gathering financial storm clouds – new tariffs, the top of an import surge, diminishing hopes for tighter trucking capability, sagging shopper and enterprise confidence, and the potential for stagflation – won’t assist intermodal volumes this 12 months. “I see much more draw back threat than upside,” he mentioned.
Even with President Donald Trump set to announce broad tariff plans on Wednesday afternoon, Gross says there will likely be uncertainty surrounding international commerce.
“What we’ve seen right here is that when there’s a deal it’s by no means fairly a carried out deal, however simply a place to begin for additional negotiation,” Gross mentioned of proposed tariffs. The administration, he notes, has usually modified its tariff plans based mostly on considerations raised by varied industries.
“So the place issues land and the way lengthy they keep that means is an enormous query mark,” Gross mentioned. “And that is a vital level as a result of what that does is create continued uncertainty.”
Producers, for instance, are unlikely to make investments in new or expanded vegetation when there’s no certainty that tariffs will stay in place or final past the present administration, Gross says.
“It’s very exhausting to plan whenever you don’t know what the longer term actuality goes to seem like. So what meaning within the close to time period for all of us is that there’s going to be very restricted results on the general flows of worldwide commerce,” he mentioned.
Provide chains received’t be capable to change rapidly, he says, and so they received’t change till there’s readability.
Roughly half of intermodal quantity is worldwide containers, whereas a considerable share of home intermodal is dependent upon imported shopper items which were transloaded into 53-foot containers.
But considerations over potential tariffs prompted firms within the U.S. to tug ahead their imports, which helped propel a surge of cargo touchdown at West Coast ports that boosted BNSF and Union Pacific worldwide intermodal quantity, in addition to their home transload container quantity.
BNSF’s intermodal quantity is up 10% for the 12 months to this point, whereas UP’s quantity is up an outsize 16%.
The rising tide of imports is one issue behind the 8.2% year-over-year development in intermodal quantity via the primary 12 weeks of 2025, in response to the Affiliation of American Railroads.
“The surge is over, however the finish of a surge doesn’t essentially imply that we’re firstly of an enormous decline,” Gross mentioned.
The tariff pull-forward has modified the standard seasonal visitors patterns. Usually, February can be a low level and import quantity would start rising in March. “I’m not actually too optimistic that we’re going to see that this 12 months,” Gross mentioned, noting that warehouse stock is excessive and have to be labored down earlier than imports rise once more.
One other wild card, Gross says, is the U.S. commerce consultant’s proposed charges on Chinese language-built or -operated ships calling at American ports.
Vessels operated by Chinese language firms would face a $1 million port name payment. Ships in-built China must pay a $1.5 million payment per port name. And any delivery line that has positioned greater than 50% of its new vessel orders with Chinese language shipyards would incur a $1 million port entry payment.
The White Home says the charges can be used to subsidize the U.S. shipbuilding business, which now not produces industrial vessels in significant numbers. The administration says the plan additionally would scale back the worldwide dominance of China’s shipyards.
The proposal was roundly criticized throughout public hearings final week. Gross says the pushback is more likely to no less than produce revisions to the plan.
“If it’s carried out as has been proposed, it has main implications when it comes to rerouting commerce flows,” he mentioned. “And that would occur in an actual hurry.”
Ships with ties to China would probably restrict their U.S. arrivals to main ports on the expense of smaller ones, Gross says. Philadelphia, Baltimore, and Charleston, South Carolina, can be victims, he says, whereas winners on the East Coast would come with New York/New Jersey and Savannah, Georgia.
The proposal additionally may immediate importers to shift U.S.-bound freight to Canadian and Mexican ports to keep away from the charges, Gross says. That will enhance the fortunes of Canadian Nationwide and Canadian Pacific Kansas Metropolis as general Canadian cross-border intermodal quantity has slumped because of labor unrest final 12 months on the railways and ports.
The opposite wrinkle in worldwide intermodal is the gradual shift of visitors again to East Coast ports. West Coast ports – notably Los Angeles and Lengthy Seashore, California – gained market share final 12 months amid considerations of a possible dockworker strike at East Coast ports.
With a brand new contract in place, shippers are actually sending their imports again to East Coast ports.
“From a West Coast standpoint, we’re going to have a double whammy of the decrease imports generally, plus decrease share,” Gross mentioned. And that will likely be an intermodal headwind as a result of containers that arrive at East Coast ports are much less more likely to transfer inland by rail because of shorter lengths of haul.
Home intermodal has extra development potential within the quick time period, Gross says. Home intermodal has been slowly regaining market share from vans the previous six months as truck capability has tightened considerably.
If there’s an financial downturn later this 12 months, he says it could be a bonus for home intermodal. “Historical past would say that in troublesome financial circumstances, notably when persons are not in a rush, intermodal is ready to achieve share,” Gross says.
And that would enhance intermodal’s fortunes. “I’m a bit bit optimistic with regard to the share achieve,” he mentioned. “If we proceed to realize share, that may greater than offset any declines that we see in an general quantity.”
Railroad intermodal service shouldn’t be a barrier to home development. By most measures, the Class I railroad intermodal networks stay fluid regardless of working a tad slower than the typical over the previous few years, Gross says.
