International Intermodal Market Expected to Contract in 2025

Larry Gross, president of Gross Transportation Consulting and analyst at the Journal of Commerce, notes that North American intermodal transportation experienced a strong yet volatile period in 2024 influenced by external factors. According to data from the Association of American Railroads (AAR), North American intermodal starts showed a year-over-year increase of 7.5% through the first week of December. The primary driver of this growth was activity in the international intermodal segment.

During the first ten months of 2024, revenue movements of ISO containers in North America increased 15% compared to the prior year. This growth suggests that a significant portion of intermodal ocean volumes expected to be transported in 2025 may have been pulled forward into 2024. This dynamic points to a potential contraction in the international intermodal market in 2025.

Larry Gross emphasizes that North American intermodal transportation in 2024 was shaped by a combination of predictable and unexpected external factors. These factors included the absence of service disruptions that were prevalent during the COVID-19 pandemic, the railroad system's reasonable management of extended peak season fluctuations, and a significant increase in overall activity levels.

As 2025 begins, a contraction in the international intermodal market is anticipated. This decline is expected to create comparison headwinds following the strong growth experienced in 2024. In particular, further growth in international intermodal on the U.S. West Coast is expected to be challenging in 2025.

Additionally, container lines are expected to maintain profitability in 2025. According to Greg Knowler's analysis, despite capacity oversupply, Suez Canal diversions and healthy volumes will keep vessel supply tight, which should push annual fixed-rate agreements on the primary east-west trade lanes from Asia above 2024 levels.

In the air cargo sector, capacity constraints and strong demand are expected to drive up costs in 2025. According to Greg Knowler's report, challenges in accessing capacity from Asia, particularly on spot market-based trade lanes, will increase air cargo costs.

In summary, contraction and challenges are expected in the international intermodal market in 2025. Following the strong growth experienced in 2024, industry participants will need to be cautious about comparison headwinds and capacity management in 2025.

Key Points:

• North American intermodal starts increased 7.5% in 2024.

• Revenue movements of ISO containers showed a 15% increase.

• A contraction in the international intermodal market is expected in 2025.

• Container lines are expected to maintain profitability in 2025.

• Air cargo costs are expected to rise in 2025.

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News Link: https://www.joc.com/article/international-intermodal-market-enters-constrained-2025-analyst-5912000

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