The North American intermodal market is undergoing unprecedented transformation as shifting trade patterns create stark contrasts between international and domestic segments. At the recent RailTrends conference in New York, transportation expert Larry Gross presented a comprehensive analysis of these market dynamics, revealing both challenges and opportunities for the industry.
A Tale of Two Markets
Gross, president of Gross Transportation Consulting, described the current situation as "a study in contrasts." While international intermodal faces significant headwinds, domestic operations show relative resilience.
"We're seeing fundamentally different economic forces driving these segments," Gross explained. "International volumes have fallen off a cliff following early-year inventory pulls tied to tariff policies, while domestic movements continue their gradual recovery."
The analyst cautioned that monthly data requires careful interpretation due to variable workdays. October 2024, for instance, saw approximately 7% more workdays than September. Even after adjusting for calendar effects, international declines remain pronounced.
Cross-Border Variations Emerge
The report highlighted diverging trends in North American cross-border traffic. U.S.-Canada movements have weakened under tariff pressures, while U.S.-Mexico flows demonstrate surprising strength.
"We've essentially returned to 2019 seasonal patterns," Gross noted. "The pandemic-era surges and subsequent volatility have largely worked through the system."
The analysis identified an unusual timing shift in peak season activity, with 2025's high point projected around week 35—several weeks earlier than traditional week 39 peaks. This follows delayed peaks in 2023 and 2024 caused by tariff-related inventory adjustments.
Domestic Focus Becomes Imperative
Gross emphasized that domestic intermodal represents the industry's most controllable growth avenue and primary battleground against trucking competition. Market share has steadily eroded since 2016, falling from 7% to about 6% of long-haul dry van and refrigerated freight.
"The three-year freight recession and post-pandemic truck capacity glut merely surface deeper structural issues," he said. "Import growth alone can't sustain the sector."
Despite 21% GDP growth since 2015, intermodal expansion has lagged economic expansion across all segments. Current volumes sit just 4-5% above 2014 levels, suggesting fundamental market challenges beyond cyclical factors.
The "Donut Hole" Challenge
Gross identified a critical opportunity in addressing the "donut effect"—underperformance in the 1,000-2,000 mile range where movements often require multiple railroads. Western single-line hauls (2,000-2,500 miles) demonstrate significantly better market penetration.
"Closing this gap could generate 8-25% volume growth," Gross projected. "Mergers represent one solution, but not the only path forward."
Key Variables Ahead
The report outlined several factors that could reshape the intermodal landscape:
Global Shipping Routes: Full reopening of Red Sea and Suez Canal transit could shift Asian imports back to East Coast gateways, potentially benefiting intermodal.
Trucking Capacity: Regulatory changes affecting driver availability may tighten truck supply and raise rates.
Geopolitical Uncertainties: Ongoing issues including Panama Canal restrictions, Section 301 tariffs, and trade tensions with China and Canada require monitoring.
Looking ahead, Gross anticipates continued international pressure and difficult year-over-year comparisons through 2025-2026, with overall volumes likely to stabilize or decline slightly.
Strategic Implications
The analysis concludes that meaningful growth will require structural improvements rather than relying on market conditions. Domestic operations—particularly in addressing middle-distance inefficiencies—appear central to any recovery strategy.
As the industry navigates these complex dynamics, adaptation and innovation emerge as critical differentiators for intermodal providers facing an increasingly bifurcated marketplace.