Intermodal rates see slight ‘reprieve’ in September

Although the decline was less severe than the previous 20-month average, intermodal pricing in September 2016 dropped for the 21st straight month compared with the prior year period, according to the latest Cass Intermodal Price Index.    Intermodal rates continued to fall in September 2016 compared to the same month last year, albeit at a slower rate than in prior months, according to the latest Cass Intermodal Price Index, which measures all-in per-mile costs.
   Rates slipped another 0.7 percent for the month compared with September 2015 following average year-over-year declines over the previous 20 months.
   The continued negative growth in rates is a record for the index, which was created in 2005. The previous record decline was set in the 13 months from December 2008 through December 2009.
   Intermodal rates fell 2 percent from the previous year in August, 2.4 percent in July, and 1.5 percent in June.
   Despite the slight “reprieve” in negative rate growth, investment firm Avondale Partners reiterated its expectations for further declines in intermodal rates for the remainder of 2016 as the precipitous drop in oil prices continues to negatively impact U.S. domestic demand.
   “We have historically observed a high degree of correlation between truckload and intermodal pricing, and know that should truckload rates accelerate in the coming months, intermodal rates would normally follow,” said Avondale. “That said, contract rates for trucking have been losing strength (even going negative in many lanes), which would imply even more potential weakness for intermodal pricing.”