<body><div><figure><img src="https://img.particlenews.com/image.php?type=thumbnail_580x000&amp;url=3UP3qh_1GsBpieC00" alt="https://img.particlenews.com/image.php?url=3UP3qh_1GsBpieC00" width="1443" height="811" ></figure><figure><img src="https://img.particlenews.com/image.php?type=thumbnail_580x000&amp;url=4BZXMA_1GsBpieC00" alt="https://img.particlenews.com/image.php?url=4BZXMA_1GsBpieC00" width="1762" height="821" ></figure>Chart of the Week: Intermodal Contract Rate per Mile – Transcontinental and East Coast lanes SONAR: IMCRPM.TRANSCON, IMCRPM.LOCALEASTIntermodal 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.Based on how closely the indices have tracked diesel, fuel explains roughly two-thirds of the transcon increase and three-quarters of the Eastern increase. Excluding fuel, transcon rates are up about 5% and Eastern rates about 2%. A common published intermodal fuel surcharge schedule would imply an even larger fuel effect, more than the entire increase in either index. That suggests many larger shippers have negotiated their own, less aggressive tables. This nuance matters because service providers look at the total rate during negotiations.J.B. Hunt, which has a large intermodal book, said it secured only low-single-digit rate increases in the bid season that closed in September. That squares with this data, which should be capturing the front end of those new contracts. High fuel surcharges are probably why the increases weren’t larger: the total rate was already elevated, and surcharges were doing most of the work. This creates a dilemma for both carriers and shippers when fuel is volatile.A larger fuel surcharge share means more price volatility. But if the contract is set when fuel prices are high, the total rate has more room to fall over the life of the contract. If fuel is a smaller share of the rate, costs stay more consistent through the year, but shippers get less benefit when fuel prices drop. Fuel surcharges are not meant to be a profit center for carriers. They are a way to share the risk and price volatility of fuel.<figure><img src="https://img.particlenews.com/image.php?type=thumbnail_580x000&amp;url=3BdvMu_1GsBpieC00" alt="https://img.particlenews.com/image.php?url=3BdvMu_1GsBpieC00" width="1766" height="806" ></figure>The market suggests that even after these sharp increases, intermodal rates have plenty of room to rise and still remain cost competitive with trucking. The Intermodal Contract Savings Index (IMCSI), which measures the average rate difference between comparable truckload and intermodal lanes, still shows a 30% savings for intermodal, down only slightly from a peak of 33% in June.Most of the increases should be fully reflected in the data in the coming weeks, which will give a clearer picture of where intermodal lands relative to trucking. It appears intermodal will remain a strong cost-saving alternative for the foreseeable future. However, the recent weather-related BNSF washout in New Mexico and the CSX technical outage are reminders that rail infrastructure can be disrupted just like trucking.So far, shippers do not seem to mind: volumes have largely recovered, and growth is still running around 7% annualized.<h2>About the Chart of the Week</h2>The FreightWaves Chart of the Week is a chart selection from SONAR that provides an interesting data point to describe the state of the freight markets. A chart is chosen from thousands of potential charts on SONAR to help participants visualize the freight market in real time. Each week a Market Expert will post a chart, along with commentary, live on the front page. After that, the Chart of the Week will be archived on FreightWaves.com for future reference.SONAR aggregates data from hundreds of sources, presenting the data in charts and maps and providing commentary on what freight market experts want to know about the industry in real time.The FreightWaves data science and product teams are releasing new datasets each week and enhancing the client experience.To request a SONAR demo, click here.</div></body>

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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.

Intermodal rates coming in hot this fall; mostly fuel driven

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Chart of the Week: Intermodal Contract Rate per Mile – Transcontinental and East Coast lanes SONAR: IMCRPM.TRANSCON, IMCRPM.LOCALEAST. Intermodal contract 

Intermodal rates coming in hot this fall; mostly fuel driven

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