FTR’s Intermodal Conditions Index sees more declines

The most recent edition of the Intermodal Conditions Index (ICI) from freight transportation forecasting firm FTR Intelligence showed continued declines in the intermodal market.

FTR said the objective of the ICI is to provide its viewers with an assessment of the competitive posture of domestic intermodal transport versus over-the-road truck transport, adding that it is a compendium of different factors, including relative rates vs. truck, industry capacity vs. demand, fuel prices and intermodal service levels.

As for how the ICI is gauged in terms of metric, FTR said figures above 0 indicate favorable conditions for intermodal to compete with truck, and figures above ten show extremely favorable conditions that would result in substantial truck to intermodal conversion. Conversely, negative numbers indicate less aggressive modal share gains for intermodal - and potentially reduced share.

For May, the most recent month for which ICI data is available, the ICI fell 1.2 points from April to May, coming in at 3.5, marking the second straight decline following a 4.8 reading in April.

FTR said this marks the lowest ICI level going back to September 2015, with May reflecting how the domestic intermodal sector is still experiencing somewhat difficult conditions, while the over all situation is still favorable from an international outlook.

“May’s ICI was adversely affected by relatively weak intermodal volumes and downward rate pressure,” said Larry Gross, FTR partner and principal author of Intermodal Update, in a statement. “However, while intermodal is not currently experiencing the robust growth to which we have been accustomed, the fundamentals still look solid, with truck capacity expected to tighten as we move into 2017 due to the approaching Federal Electronic Logging Device mandate. Fuel prices are also moving up, which provides some tailwind for intermodal.”

In a recent interview, Gross said the impetus for the ICI in a way was a “hole that needed to be filled” to compliment the firm’s Trucking Conditions Index (TCI) and Shippers Conditions Index (SCI).

“What is measuring is how effectively intermodal is positioned vis-à-vis trucking, so it is going to be measure of intermodals’s ability to convert volume off the highways,” he said. “When you talk about intermodal, half of it is international, but this is focused on the domestic piece.”