Insights From IANA Expo2021

Written by Jim Blaze, Contributing Editor
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BNSF photo

With lingering concerns about COVID-19 infections, this year’s attendance at the Sept. 12-14 Intermodal Association of North America (IANA) Expo2021 conference in Long Beach, Calif., was relatively low when compared to the association’s past events. But those participating—3PLs, shippers, railroads, truckers, maritime ship operators, ports and various containerization suppliers—were energized about the multi-modal trade with containers, and the presentation sessions offered meaningful metrics and give-and-take dialogue. And yes, equipment, technology, and various intermodal services and products were on display with a “please touch and question” atmosphere.

This long-time intermodal container commerce analyst/economist (since my maritime vs. rail 1968 master’s thesis) concludes that rail-maritime-intermodalism with domestic and the somewhat smaller international containers remains a core supply chain operation. It’s not disappearing. It is selectively growing—but at different rates of change across a number of different long-distance lanes.

Yes, there are challenges. That’s why these kinds of group conferences are important. Folks did not come to Long Beach to celebrate. They were engaged in commerce, looking for technical solutions to some problems, and searching for a possible traffic rebound into either 2022 or possibly mid-year 2023. There is uncertainty as to how long before global and North American trade returns to its previous slope of upward volume growth.

Kickstarting the lively but respectful discussion of the state of intermodal logistics was a graphic-intensive presentation by independent subject expert Larry Gross, one of my top three go-to sources for tracking the numerical pattern of intermodal business changes by market sectors and by major modal activity. He takes us all into the deep level of market dissection.

Courtesy of IANA, here are samples of what this old economist views as some of the changing features:

There is about a 50-50 split in the intermodal rail business market, as illustrated in Figure 1. This slide covers the North America geography as particularly handled by railway movements:

Railway intermodal volumes are in recovery and reset metrics right now as we read this Figure 2 of data sorted and graphed by Gross. The takeaway message is that North American revenue container volumes are for the moment falling for each of the two market segments, domestic and international:

The exact pattern would be different for each port to inland destination market, but that corridor-by-corridor pattern is not shown here. That breakout is available elsewhere in both IANA’s and Gross’s library of reports.

Figure 3 gave Expo attendees a different view of the four-year trending pattern by each year back to the last really good intermodal year of 2018. Here the pattern measures against a trailing four-week average. Note that the Figure 3 graph is a compilation of North America and U.S. traffic volumes:

Figure 4 is a market view of the Mexican and Canadian supply chain picture:

Alert to our Railway Age international readers: You do not have access to such deep dive market geography intermodal data for most of the rest of the rail/maritime world of commerce. We only see such near-real-time reporting here in North America. Such management intelligence reporting techniques are one of the tools yet to be exported to the rest of the world. 

This is important as a reminder that one can manage complex networks only by capturing and then using such intelligence tools.

Figure 5 displays a unique look at the capacity bottleneck issue associated with intermodal last-mile and first-mile trucking drayage. These extreme times required for drayage as an index highlights a quicksand-like problem that befuddles both the port maritime and the rail intermodal market segments. Ports, ocean carriers and Class I railroads like Union Pacific and Norfolk Southern often do not manage or otherwise control truck container drayage operations:

In closing, there were some subjects into which I wish the participants had dug deeper regarding the challenges ahead, particularly for the rail intermodal mode section of the business:

  1. There was little evidence showing how rail will penetrate as a low-energy-use short- to mid-distance intermodal mover of containers. No discussion yet of how to profitably introduce Port of LA/Long Beach container shuttle trains into the Bakersfield-Central Valley developing warehouse region. Who is going to step forward as lead organizer? Are we talking short trains or long trains? What’s the missing catalyst? It’s still a commercial mystery on how to execute.
  2. There was little focused discussion about who is leading the capital investment for critical stack train railcar sets. At some point, the TTX pool fleet of cars needs both steady-state replacement and new cars for growth capacity.
  3. It was somewhat disconcerting to see only one of the seven Class I railroads—BNSF—with an active Expo hall display and a business booth for meetings and discussion. BNSF alone stood out with its presence. Does the absence of the other six suggest something fundamental about the leadership role of the large railroad companies? It’s an important question, not necessarily a criticism. 

There were several very interesting discussions to be recognized. Among them, to this technical reporter, were the following themes:

  1. Intermodal terminal operation is going to be automated. The how and the how-quickly remain unknowns for now in 2021.
  2. The participants recognize important differences between intermodal reporting asset movement (visibility) vs. highly desired reliable cargo and container box final delivery to the market demand-side “receivers.”
  3. Multiple experts projected their uncertain timelines about returning to reliable supply chain flows. There is a consensus of many participating experts that normalcy and congested bottleneck eliminations might stretch into parts of 2023 because of critical parts and labor shortages. 

Clearly, the logistics cost minimization business models that lower inventory on hand relative to predicted sales has to reexamined. There is only so much recovery capacity available in the transport networks and terminal and mode change hubs to make up for mistakes from the just-in-time manufacturing and delivery models we old-timers all witnessed evolve over the past three or more decades.

Buyers will have to rethink that kind of sourcing and advanced restocking and forward inventory business process, because transport capacity is also minimized in today’s operating ratio- and asset utilization-centric rail and maritime vessel business models.

Translation: Resiliency in high-efficiency complex networks is realistically limited. It might not be until mid-first-quarter 2022 before we will all get an opportunity to see what the global and North American recovery pace and the next growth spurt timing might be.

What’s your view? Contrary opinions are encouraged.

Independent railway economist and Railway Age Contributing Editor Jim Blaze has been in the railroad industry for more than 40 years. Trained in logistics, he served seven years with the Illinois DOT as a Chicago long-range freight planner and almost two years with the USRA technical staff in Washington, D.C. Jim then spent 21 years with Conrail in cross-functional strategic roles from branch line economics to mergers, IT, logistics, and corporate change. He followed this with 20 years of international consulting at rail engineering firm Zeta-Tech Associated. Jim is a Magna Cum Laude Graduate of St Anselm’s College with a master’s degree from the University of Chicago. Married with six children, he lives outside of Philadelphia. “This column reflects my continued passion for the future of railroading as a competitive industry,” says Jim. “Only by occasionally challenging our institutions can we probe for better quality and performance. My opinions are my own, independent of Railway Age. As always, contrary business opinions are welcome.”

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