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Intermodal Freight Transportation Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

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  • 120 Pages
  • January 2022
  • Region: Global
  • Mordor Intelligence
  • ID: 5239693

The Intermodal Freight Transportation Market is expected to register a CAGR of 8.27% over the forecast period from 2021 to 2026. As companies evaluate new ways to reduce freight costs and their carbon footprint, alternative transportation mode options should be considered when moving long freight distances. While trucking remains the most dominant mode of shipping products domestically, intermodal freight transport offers freight savings and reduced emissions, especially when transporting products over distances of 500 miles or more. Optimizing each transport method's relative strengths and efficiencies, intermodal can help reduce cargo handling, damage, and loss, enabling freight to be transported more securely and at lower overall costs.

Key Highlights

  • According to the Council of Supply Chain Management Professionals State of Logistics Report, transportation comprises 66% of total logistics costs. Failing to proactively manage the transportation network can cause these costs to rise as trucking challenges such as driver shortages and productivity-hampering trucking regulations constrict capacity in the years ahead. If the organization seeks to minimize supply chain disruption, mitigate supply risk, and lower transportation costs, intermodal can be a powerful solution. Adding intermodal into the transportation mix delivers tangible cost savings. Incorporating multiple modes of transportation into the carrier base reduces reliance on a single source of capacity. Supply chain leaders who use multimodal freight moves could realize short and long-term benefits by leveraging each mode of transportation's strengths.
  • Moreover, the U.S. Environmental Protection Agency (EPA) reports that using intermodal transport for shipments over 1,000 miles can cut fuel use and greenhouse gas emissions by as much as 65%, relative to truck transport alone. A truck that can transport 40,000 lbs from Los Angeles to Boston produces approximately 4.35 tons of carbon emissions. The same 40,000 pounds, which could be shipped via intermodal rail, produces 1.75 tons of carbon emissions, significantly less. Intermodal transportation can effectively help reduce a company's carbon footprint. The EPA estimates that every ton-mile of freight moves by rail instead of highway can reduce greenhouse emissions by two-thirds. This is essential as companies are continually working to reduce their carbon footprint to comply with environmental regulations and meet their own corporate sustainability goals.
  • Extensive intermodal rail facilities are challenged by high truck volume and often serve the trucks in the order they arrive at a crane, which is not optimal. Efficiencies can be gained by calling the trucks to the crane to match the containers' stacking order rather than shuffling boxes to serve the trucks on a first-come, first-served basis. This makes the trucker with transactions to significantly reduce the need to contact the terminal, helping terminals capture billable processes and events. Items such as checking whether a waybill is in place well before a trucker's arrival at the gate could be managed with the help of a mobile software application. This capability could help drivers perform advanced check-in and check-out, complete service requests confirm unit locations, and receive parking location updates from a mobile phone.
  • The market is witnessing significant mergers and acquisitions by multiple companies to increase their presence. In February 2020, Elemica, a digital supply network provider for various industries, has acquired Eyefreight, a provider of multimodal SaaS Transportation Management Solutions. The combination is expected to create a unified global logistics and supply chain network. Together, the clients could take advantage of Elemica's comprehensive end to end supply chain network while providing it's clients the ability to incorporate transportation management capabilities to their supply chain. These capabilities will leverage a connected network of carriers and logistics service providers for multimodal visibility and business intelligence.
  • In January 2020, Transplace, a provider of logistics technology solutions and transportation management services, has acquired Lanehub, a cloud-based platform, and community that encourages shipper-carrier collaboration by automatically identifying and connecting companies with parallel freight lanes to save on shipping expenses. The software is capable of matching recurring freight lanes consistently, increasing fleet revenue, reducing transportation costs, and improving overall carrier service and performance. Lanehub's collaboration network currently includes over 150 shipper members, 250 carrier members, 180,000 lanes, and over USD 23 billion in truckload spend. Lanehub customers have over 26 million matches within Lanehub's network.

Key Market Trends

Rail and Road Transport is Expected to Hold Significant Share

  • Intermodal transportation provides predictable and reliable shipment of freight, and it’s available at a compelling price and could be integrated into existing freight transportation systems. The United States rail industry accounts for more than 40 tons of freight per capita, and intermodal shipments usually take place in 53-foot-long containers. One intermodal train can move the same amount of freight as 280 trucks, according to an estimate by railroad CSX. Shippers, in general, are considering multiple factors when looking to use intermodal transportation, such as inefficiencies related to railroad conversions to precision scheduled railroading (PSR), the availability of shipping equipment, load pricing, and the ongoing truck driver shortage.
  • While demand has increased for a more efficient and faster shipment of goods, the rail industry has worked to improve operations by implementing precision scheduled railroading. PSR regards the shipment of the same amount of freight with fewer railcars and locomotives, using a planned direct line for shipments across a rail network. Conventional trains move freight when full, but under PSR, trains begin to move at a set time whether the freight is there. PSR's goal is to enable faster speeds, longer trains, and less dwell time in terminals. However, as the rail industry has moved to PSR, it’s impacted existing shipping lanes and led to a reduction in equipment and staff.
  • Rail carriers in the United States and neighboring countries have worked to upgrade equipment, improve shipping schedules, reduce loading and unloading times, and increase the number of lanes to support multiple delivery locations. The United States intermodal rail system extends throughout the United States, touching every major port with some coast-to-coast service offerings faster than the truck. Mexico has an excellent rail system extending across most of the country, with well-established rail connections at the Unites States border. Canada has two major railroads that run coast-to-coast: the Canadian National Railway (CN) and the Canadian Pacific Railway (CP).
  • Technology and intermodal rail are helping shippers to meet the challenges of the transportation environment. CSX Transportation operates over a network of over 40 terminals. The intermodal business serves across significant markets east of the Mississippi and the transportation of goods in multiple containers, providing companies with service similar to trucking for shipments moving over 500 miles. CSX CSX Transportation surveyed transportation management system providers to gain insight into transportation through intermodal rail. Intermodal rails are more focused on cost savings and capacity. Adding a transportation management system, beginning a multimodal conversion journey, or gaining the best use of both will advance shipper objectives.
  • The international and domestic intermodal sector has not entered the restart phase in terms of returning to pre-COVID-19 pandemic levels, failing to exhibit the same bounce back seen in trucking, and railroads may not see a full recovery until some point in 2021. Shippers will be slower to return to rail because discretionary spending and industrial production will take a while to recover, and truckload rates will be very competitive. Intermodal volume had fallen between 10 and 20% below the five-year average in each week of the second quarter of 2020, according to Association of American Railroads (AAR), reaching its low point in mid-March, when the volume was down 18% from the same week over the last five years. According to AAR, the intermodal volume has declined 15% in the first nine weeks of the second quarter and 11% in 2020 through the end of May.

North America is Expected to Hold Significant Share

  • The intermodal freight transportation market in the North American region is increasingly dependent on the consumer economy's demand. The rail industry in the region is concentrating on creating new intermodal services that can successfully rival the over the road options. In August 2019, Canadian National Railway (CN) and CSX Transportation announced a new intermodal service offering between CN's greater Montreal and Southern Ontario areas, and the CSX-served ports of New York, New Jersey, Philadelphia, and the New York City metropolitan area. This intermodal offering is expected to convert long-haul trucks to interline various rail services. Trains will be able to run directly into the center of Toronto and Montreal's urban markets via CN intermodal yards, making this partnership a natural opportunity for both railroads.
  • In North America, total intermodal volumes decreased 7.4% in the last quarter of 2019, comparing year-on-year with 2018, according to the Intermodal Association of North America. Domestic containers decreased by 2.7%, international shipments, and trailers decreased by 9.1% and 21.4%, respectively. The region is also witnessing significant new players entering the market. For instance, in May 2020, The Firmament Group, a provider of tailored debt and equity capital solutions to small- and medium-sized enterprises (SMEs), announced the formation and launch of Envase Technologies, a provider of cloud-based transportation management systems and mobile applications for intermodal transportation providers, including third-party logistics companies, drayage carriers, global freight forwarders, and intermodal marketing companies. The company will provide service to 500+ intermodal customers spanning ports and terminals across nearly all 50 states in the U.S., Canada, and Mexico.
  • In February 2019, Wabtec Corporation, a US-based company, has completed its merger with GE Transportation, a former business unit of GE. This merger is expected to establish Wabtec Corporation as a Fortune 500, global transportation and logistics player by combining Wabtec's broad range of freight, transit, and electronics products with GE Transportation's equipment, services, and digital solutions locomotive, mining, marine, stationary power, and drilling industries. The company plans to accelerate lifecycle solutions for the transportation industry and unlock significant productivity for customers by improving interoperability, efficiency, and competitiveness. Wabtec expects to benefit from the cyclical tailwinds the industry witnessed, including volume growth of 38 million carloads and intermodal units.
  • Intermodal volume has been on a steady decline in the region since mid-February due to COVID-19, an aberration in typical seasonal trends based on the five-year average. In the last week of March 2020, North American intermodal rail volumes fell to the lowest point in nearly a decade, underscoring the dramatic fall-off in containerized imports and slowing growth in the shipment of trailers and domestic containers. According to a JOC.com analysis of data from the Association of American Railroads and BNSF Railway, intermodal volume declined 15% year over year to 339,125 containers and trailers in the week ending March 27, the worst final week of a first-quarter since 2013. The decline in volumes is contributing to a deep financial hit to Class I railroads, a rail industry analyst with Deutsche Bank, reckons will cost the industry some USD 9 billion in revenue, including intermodal and railcar business, and USD 4.7 billion in profits this year.

Competitive Landscape

The Intermodal Freight Transportation market is moderately fragmented, as the few players are entering the market to provide various software and services related to support intermodal transportation methods. Moreover, the acquisitions have been a key trend observed across the years in the market. Some of the key players include Oracle Corporation, Cognizant Technology Solutions Corp, HighJump (Körber AG), Blue Yonder Group, Inc. (JDA Software), etc.

  • July 2020 - Transplace has launched its Platform Services, including analytics and benchmarking tools, a command center with real-time visibility and optimization, and network collaboration. Shippers that utilize JDA, Oracle, and other resource planning systems to manage their supply chains can directly feed their data into the Company's Platform Services via standard API connections.
  • February 2020 - JDA Software, Inc., announced that it would be named Blue Yonder. The name change is part of a company's strategy of a re-branding initiative to better align its name with its cloud transformation and product roadmap, embracing a future full of innovation, continuous improvement, and better customer experience.

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Table of Contents

1.1 Study Assumptions and Market Definition
1.2 Scope of the Study
4.1 Market Overview
4.2 Industry Attractiveness - Porter's Five Forces Analysis
4.2.1 Threat of New Entrants
4.2.2 Bargaining Power of Buyers/Consumers
4.2.3 Bargaining Power of Suppliers
4.2.4 Threat of Substitute Products
4.2.5 Intensity of Competitive Rivalry
4.3 Assessment on the impact due to COVID-19
5.1 Market Drivers
5.1.1 Increasing need for effective and cost-efficient means of transportation by global supply chains
5.1.2 Rising awareness regarding the reduction of carbon footprint
5.2 Market Challanges
5.2.1 Lack of effective effective planning and communication can increase transportation costs
6.1 By Component
6.1.1 Software
6.1.2 Service
6.2 By Transportation Mode
6.2.1 Rail and Road Transport
6.2.2 Air and Road Transport
6.2.3 Maritime and Road Transport
6.2.4 Other Transportation Modes
6.3 End-User Industry
6.3.1 Industrial and Manufacturing
6.3.2 Oil and Gas
6.3.3 Consumer and Retail
6.3.4 Food & Beverage
6.3.5 Construction
6.3.6 Other End-User Industries
6.4 Geography
6.4.1 North America
6.4.2 Europe
6.4.3 Asia-Pacific
6.4.4 Latin America
6.4.5 Middle East and Africa
7.1 Company Profiles*
7.1.1 Oracle Corporation
7.1.2 Cognizant Technology Solutions Corp
7.1.3 HighJump (Körber AG)
7.1.4 Blue Yonder Group, Inc. (JDA Software)
7.1.5 Transplace, Inc.
7.1.6 GE Transportation (Wabtec Corporation)
7.1.7 The Descartes Systems Group Inc. (Descartes Aljex)
7.1.8 Motorola Solutions, Inc.
7.1.9 Elemica, Inc. (Eyefreight BV)
7.1.10 Envase Technologies

Companies Mentioned

A selection of companies mentioned in this report includes:

  • Oracle Corporation
  • Cognizant Technology Solutions Corp
  • HighJump (Körber AG)
  • Blue Yonder Group, Inc. (JDA Software)
  • Transplace, Inc.
  • GE Transportation (Wabtec Corporation)
  • The Descartes Systems Group Inc. (Descartes Aljex)
  • Motorola Solutions, Inc.
  • Elemica, Inc. (Eyefreight BV)
  • Envase Technologies