Truck Tonnage Will Grow Despite Recent Intermodal Attention

Intermodal freight movement has become all the rage since Warren Buffett's $26 billion investment in Burlington Northern Railroad, writes industry analyst John Schulz in a recent Gerson Lehrman Group report. "But how much freight, really, is going to be moved out of reliable, 53-foot dry van trailers and onto intermodal rail? The dirty dark little secret: not much."

"Because of rail's limited scope - and, most importantly, shoddy service - intermodal rail is not that much of an option for a vast majority of today's all-truck shippers," said Schulz. He estimates that as many as 90 percent of all-truck shippers today have no viable rail alternative.

ATA forecasts that total primary freight shipments in the United States will increase from 15.55 billion tons in 2006 to 19.85 billion tons in 2018, an increase of almost 28 percent over the next 12 years. While intermodal sector will grow, ATA forecasts trucking's share of the market will increase from 69 percent in 2006 to 70 percent in 2018.

"Sure, rail is fine on 1,500-mile lengths of haul from, say, Chicago to Los Angeles or Chicago to Portland. Chicago to Dallas is another good route. But suppose one wants to go from a company's distribution center in Central Pennsylvania - say, York, Pa. - to Cleveland. Is that going to go by rail? No way. Nor is a lot of the other all-truck freight being hauled today by the likes of UPS Freight, FedEx Freight, Con-way and other LTL providers," said Schulz.

"Fact is, truck service is hard to match. Eventually nearly everything but the bulk commodities of grain, coal and lumber goes by truck. The market place has spoken on that score," said Schulz. "Intermodalism might be the flavor of the day to some. But I've been hearing that intermodal is the 'future of transportation' for lo, some 30 years now. During that span, all trucking has done is expand its market share."