Intermodal demand remains strong, secure contract rates now
West Coast high season ends
On 19 December, 2024, the Union Pacific (UP) announced the California intermodal market was no longer constrained as of Sunday, 22 December 2024. Accordingly, high season surcharges were removed on that date.
This announcement occurred a bit later in the year than in past years. While high season fees have been removed, do not expect market volume to diminish instantly. Volumes are still elevated compared to seasonal norms.
Factors keeping volumes elevated
Several factors contribute to the higher seasonal volumes. First, the averted port strikes and associated rerouting fostered uncertainty.
Second, concerns over potential new tariffs have prompted importers to pull orders forward before March, which is the earliest date the new administration could put new tariffs in place.
Third, the regular retail high season surge at present of year is exacerbating the situation. As a result, West Coast ports are expected to experience increased demand for several more weeks. Overall, the domestic U.S. intermodal market is up 8.3% year to date.
Labour agreement reached for U.S. East and Gulf Coast ports
An agreement was reached between the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX). The previous agreement was set to expire on 15 January, 2025.
2025 pricing prospects
Expect increased intermodal pricing in the low, single-digit range through 2025 due to new U.S. railroads that have labour agreements and inflationary pressure. Rates have already begun to rise, so the best time to lock in intermodal rates is now.
Spot rates remain low as they mirror the current over the road market. However, the railroads are confident spot prices will jump dramatically in the second half of 2025. If they are correct, the lowest year-long rates will be right now.
Strong service metrics
Intermodal service, as measured by train speeds, is tracking just below the five-year average. However, given the large increases in volume and demand, rail service is still performing very well overall.
With strong service and low pricing, contact your C.H. Robinson account team to see how you can best take advantage of intermodal service within your portfolio.