Shippers Opt for Trucking Over Intermodal Routes
Shippers are steering clear of cheaper intermodal options even as the industry touts a modal shift toward rail and short‑sea transport, according to insights shared by Nicholas Shipe of Circle Logistics.
Reliability often outweighs cost.
Production uptime outweighs cost savings
Shipe explained that manufacturers prioritize keeping assembly lines running over marginal freight savings. “When a plant shuts down because a shipment is delayed, the lost revenue dwarfs any reduction in transportation cost,” he said.
The trade‑off often leads companies to choose expedited truck service despite higher rates.
Automotive parts, which often travel on tight schedules, exemplify this tension. A single late component can halt a production line for hours, prompting firms to favor reliability. The report notes that shippers assess carrier performance histories and on‑time delivery metrics more heavily than price per mile.
In practice, this means that intermodal routes, which can be slower and subject to bottlenecks at rail yards, are less attractive for time‑critical loads. Even when rail offers a cost advantage, the risk of missed deadlines pushes many to stick with faster, albeit pricier, trucking lanes.
Energy considerations reshape supply‑chain decisions
Another factor Shipe highlighted is the United States’ “overlooked energy advantage.” The country’s abundant fuel supplies keep diesel prices relatively stable, reducing the cost pressure that might otherwise make intermodal more compelling. According to the briefing, this energy setting supports a logistics model that leans on road transport.
Data from recent freight surveys show that diesel fuel accounts for roughly a third of total transportation expenses for many shippers. When fuel costs stay low, the marginal savings from rail diminish, especially when combined with the desire for speed.
Moreover, the report points out that rail infrastructure investments have not kept pace with the growing demand for high‑capacity, high‑frequency services. This lag contributes to longer dwell times at terminals, further eroding the appeal of intermodal solutions for manufacturers needing rapid turn‑around.
While some analysts argue that a shift toward greener transport could eventually tip the balance, the current reality is that most carriers and shippers still view reliability as the primary metric.
Improvements in rail scheduling, terminal automation, and real‑time tracking could make intermodal more competitive, but such changes will take time to implement.
In the short term, shippers appear content to absorb higher costs in exchange for the certainty that their goods arrive when needed. This preference reinforces a logistics pattern that favors road freight, even as broader economic and environmental pressures mount.
