Modal shift dampens trucking market

Chart of the Week: Loaded Domestic Rail Containers, SONAR long haul tender volume index – USA SONAR: ORAILDOML. USA, LSTVI. USA Intermodal use has grown 10% compared to 2025 for domestic-sized containers (ORAILDOML), while long-haul tender volumes (LSTVI) are flat.

The two modes have been moving in opposite directions since the middle of July, with truckload demand falling faster than seasonally expected. This suggests shippers are once again looking to escape the elevated costs and challenges of the trucking space by utilizing the rails. Will this accelerate the end of this truckload upcycle?

Long-haul tender volumes are defined as tenders for loads moving more than 800 miles. This segment is the most fungible with intermodal, and it is also where intermodal has the most significant cost advantages for shippers. Total tender volumes are up 6% y/y over the past week, with long-haul tenders being the only segment that does not show annual growth.

On top of that, the LSTVI has also fallen to its lowest point of the year, which is unusual to see in August, especially as imports have been strong into the California ports. window. googletag = window. googletag || {cmd: []}; googletag. cmd. push(function() {googletag.

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push(function() {googletag. display('div-gpt-ad-1709668545404-0'); }); Long-haul trucking demand is heavily tied to imports, as around 30-40% of container imports arriving from overseas clear through the port complexes of Los Angeles and Long Beach.

Much of that freight moves across the country to the major cities on the East Coast, where most of the population lives. While Los Angeles is the main gateway, much of the freight stays in an international container and moves across the country before getting transloaded into a truck or domestic container.

Chicago is the largest market for domestic container shipping in the U. S. and has had a 9% growth rate compared to last year, versus Los Angeles’s increase of only 3%. Atlanta, which gets fed by Savannah and Los Angeles containers, has seen over 20% growth in domestic container volumes. The primary driver appears to be a rapid increase in truckload costs.

Truckload contract rates from Chicago to Elizabeth, NJ are up 31% (including fuel), compared to intermodal’s 5%. Trucking rates from Atlanta to Elizabeth are up nearly 60%, compared to just 6% for intermodal. These differentials are too great for many shippers to overlook.

Growing risks While the cost savings are undeniable, and any shipper with the ability to leverage intermodal has to consider it, these spreads are unsustainable, and rail infrastructure has its limitations. Rate increases are a certainty for intermodal carriers. They could raise rates into the double digits and still not risk losing business based on cost.

There is simply too much money on the table — though the looming transcontinental merger may help hold rates down on some level until a ruling is made. We are also not quite at intermodal’s peak season, which traditionally occurs in September and October.

The rails have been able to manage the additional demand stress thus far, but drayage is a going concern with severe limitations tied to the same issues constraining longer-haul trucking. The third potential factor that could change the market dynamic is a returning sense of urgency.

There is little seasonal pressure on shipping in August compared to the holiday periods, and back-to-school demand has largely already arrived. Inventory levels, especially on the downstream end, are tighter than they have been in recent years, as Dr. Zac Rogers — co-author of the LMI — discussed on this past week’s Freightonomics podcast.

This could mean that shippers are more exposed to unexpected demand shocks, which favors trucking over intermodal shipping. window. googletag = window. googletag || {cmd: []}; googletag. cmd. push(function() {googletag. defineSlot('/21776187881/fw-responsive-main_content-slot3', [[728, 90], [468, 60], [320, 50], [300, 100]], 'div-gpt-ad-1665767553440-0').

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display('div-gpt-ad-1665767553440-0'); }); So while there is no doubt that the shipping community is doing the right thing in the moment, there are reasons to make sure they are prepared for the risks of relying too heavily on a single mode of transportation, as the freight market and supply chain management remain a dynamic space with no clear path forward.

About the Chart of the Week The FreightWaves Chart of the Week is