In the bustling trade corridor between Mexico and the United States, a surprising trend has emerged: intermodal transport is underperforming despite a booming market. While news reports highlight an increasing volume of freight crossing the border, intermodal rail volumes tell a different story.
According to the Intermodal Association of North America’s (IANA) data, there has been an 8.5% decrease in cross-border steel-wheel revenue moves in the first eight months of 2024 compared to the previous year. This downturn is consistent throughout the year, with April being the only exception. This decline is particularly striking given the overall surge in cross-border freight, a phenomenon fueled by near-shoring and the “tariff washing” of Chinese goods rerouted through Mexico to the US.
The US Bureau of Transportation Statistics (BTS) supports this boom with data showing a staggering 93% year-over-year increase in “loaded truck containers” entering the US from Mexico in the first half of 2024. These containers include a variety of truck types, from dry vans to flatbeds. So why is there such a significant disparity between the thriving trucking sector and the lagging intermodal volumes?
One possibility could be inaccuracies in the reporting of intermodal data by IANA. It’s conceivable that goods are initially trucked across the border and then transferred to rail for further inland travel. However, if this were the case, we would expect to see a surge in revenue moves from the US South Central region, which is not happening. In fact, this region has only seen a modest 1.2% increase in outbound revenue moves, significantly underperforming compared to the 2.9% growth in overall domestic volumes.
The issue might also lie in logistical constraints, such as a shortage of containers available in Mexico for loading, exacerbated by a heavy imbalance in northbound versus southbound traffic. Additionally, the current intermodal offerings may not be competitive in terms of service consistency, speed, and cost savings compared to trucking, which could be diminishing its appeal in this bustling market.
This underperformance in intermodal transportation amidst a market boom poses significant questions for railroads and intermodal providers. As they face one of the major growth opportunities in the cross-border market, pinpointing and addressing these challenges will be crucial for leveraging potential growth and improving service offerings.
