Intermodal rates coming in hot this fall; mostly fuel driven
Fuel surcharges are doing most of the work for intermodal contracts this year, but are further increases expected?
Chart of the Week: Intermodal Contract Rate per Mile – Transcontinental and East Coast lanes SONAR: IMCRPM.TRANSCON, IMCRPM.LOCALEAST
Intermodal contract rates, including fuel, have taken off in the fourth quarter. Transcontinental (TRANSCON) rates are up more than 12% year over year, and rates on the shorter Eastern lanes (LOCALEAST) are up close to 9%. Intermodal rates are typically negotiated on annual cycles, with most resetting near year-end. While the increases look aggressive, intermodal still offers a deep discount to truckload, and fuel is playing a major role in both.
These indices are based on invoices that include fuel surcharges. Invoice data lags the actual freight movement by a few weeks, so diesel price swings show up in the indices later. That lag is clearly part of the two strong jumps over the past year.
The roughly 50% rise in diesel prices in March and April was followed by a 6% increase in the transcontinental contract index from April to May. The roughly 36% increase in diesel from July to September was followed by a 10% increase in the index from August to October.
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