Growth in Intermodal Volumes Contributes to Economic Recovery

Posted : 05/20/13 6:01

One of the strongest indicators of a return to economic stability has been the growth of intermodal volumes during the past year. Across the board increases of 5% in Q2 of 20121 have encouraged new investment in developing intermodal infrastructure. These in turn have contributed significantly to the general national economy. The increased volumes have also added to the bottom line for companies like J.B. Hunt who experienced significant growth in income for Q1 20132 as the effects of the increased volumes have filtered into the industry. Part of the success of the railways at the moment is due to the influence of decreased transit times for rail freight as the development of intermodal infrastructure begins to impact on freight handling efficiency. The transition of the railways from bulk carriers to container cars has also contributed to their increased volumes. The most significant factor in their good returns has been driven by the cost of fuel which has seen a great deal of freight moving from trucks to trains as consumers take advantage of the renewed rail networks. At the same time some major transport companies are being cautious about making projections while trying to maintain their optimism for 2013. Union Pacific CEO Jack Koraleski made a statement recently in which he said that while Union Pacific were ready for the expected increases in volume over the next few years, they were equally well positioned to deal with an economic downturn. With an overall increase in revenue of 11% on last year’s figures Union Pacific are justified in feeling confident about the future but with freight volumes down for agricultural and mining products their caution may be well founded. While the boom in container freight that is being driven largely by bullish consumer behavior may have been a short term windfall the long term of this economic resurgence is uncertain. The influence of the Panama Canal redevelopment is yet to be fully known and the consumer boom may only increase the freight volumes through American ports. At the moment the biggest players in the transport sector are contenting themselves with a game of wait and see. In the meantime the increased intermodal volumes have contributed to the current return to economic growth in the US by creating jobs and injecting money into local economies. It is hoped that this will contribute to growth in consumer spending which in turn will lead to continued growth in intermodal volumes in the future. References: 1. http://www.ttnews.com/articles/basetemplate.aspx?storyid=29979&page=2 2. http://www.ttnews.com/articles/basetemplate.aspx?storyid=31729&t=JB-Hunts-1Q-Income-Improves