Effects of Recent Trends in Container Throughput

Effects of Recent Trends in Container Throughput

Changes in container throughput affect not just marine port and terminal operations, but also other transportation modes and transportation service providers. The rise in container cargo demand in early 2010 affected containership fleet capacity, railroads and commercial trucks that service the seaports, and the inland warehouses and distribution centers that provide logistical support for the entire multimodal freight supply chain.

First, due to an increase in the demand for containership services, estimated active containership capacity calling at seaports worldwide rose in June 2010 from the record lows experienced in 2009 (AXS-Alphaliner 2010). During the first half of 2010, active containership capacity climbed 15 percent over the previous 6 months, to 13 million TEU's, as the number of idled vessels fell and new vessels were delivered for service. Most of the surge in capacity was due to the reactivation of idle vessels. Because of rising demand for containership services, idle capacity dropped to 350,000 TEUs in June 2010, down from 1.5 million TEUs at the end of December 2009.

Second, changes in containerized export and import volumes also affect the number of intermodal shipping containers and truck trailers transported by rail.5 For example, from January to June in 2010 the Nation's Class I railroads handled 5.2 million units, up 12 percent from 4.6 million during the same months in 2009, but down 7 percent from 5.6 million in 2008 (AAR 2010a).6

About 60 percent of rail intermodal traffic consists of merchandise imports and exports that interchange between ship and rail at U.S. container ports—the remaining 40 percent of rail intermodal traffic is domestic (AAR 2009). The imports arrive on ocean vessels and are long-hauled by railcars to destinations across the country; the exports originate across the Nation and are shipped to destinations around the world. By June 2010, the number of international intermodal containers moved from seaports by rail totaled 3.4 million, an increase of 14 percent from 2.9 million during the same period in 2009, but down 14 percent from 3.9 million from the same period in 2008 (Intermodal Association of North America 2010). This growth was due partly to restocking by U.S. businesses that had reached record low inventories during the 2009 economic downturn (USDOC BEA 2010a and Alessandria et al. 2010).7

Demand for trucking services also moved in concert with the changes in container port throughput. In June 2010, according to the American Trucking Association, trucking activity nationwide was up 8 percent over June 2009, the seventh consecutive month-over-month increase. By June 2010, year-to-date trucking tonnage was up 7 percent compared with the same period in 2009, but down about 5 percent compared with same period in 2008 (ATA 2010).

Nationwide freight activity for all modes, measured by the Freight Transportation Services Index (TSI), declined 4.0 percent in 2009. However, according to the USDOT's Bureau of Transportation Statistics, the index rose 2.9 percent through the last 7 months of 2009, a trend that continued into early 2010 (USDOT RITA BTS 2010). The freight TSI measures changes in the output of services provided by the for-hire freight transportation industries and consists of data from the tracking of for-hire transportation via truck, rail, inland waterway, pipeline, and air freight.

Third, in addition to affecting the movement of freight throughout the United States, container volume also affects the warehousing and distribution of intermodal freight, and the industry investments in freight infrastructure. Logistics providers are developing massive integrated freight logistic distribution centers at inland locations such as Kansas City, Memphis, Columbus, and Chicago (Mongelluzzo 2010). Each day, thousands of imported containers are transported as far as 2,000 miles to these hubs—mostly by rail—on behalf of large-scale retailers and third-party logistics providers. These freight hubs serve both east coast and west coast container ports. To long-haul the steady stream of imported containers that arrive at the seaports into the interior of the country, the Nation's Class I railroads are developing mega hubs and renovating some of their rail tracks and tunnels for double-stack trains.8 For example, in August 2010, Norfolk Southern opened its Heartland Corridor route to facilitate the movement of double-stack trains from the port of Norfolk, Virginia, to several hubs in the Midwest, including Columbus, Cincinnati, and Chicago. This newly expanded corridor and those developed by other railroads, including CSX Transportation, Union Pacific, and Burlington Northern Santa Fe, are likely to alter the domestic movement of international freight in coming years.

5 As used in this report, the term "intermodal" refers to the traditional rail and truck combination only. This involves using rail for the long-haul portion of the shipment and trucks for the shorter distances at both ends of the shipment. The term is also used to describe shipments transported by multiple modes, including ocean vessels.

6 Class I railroads are line-haul freight railroads with 2009 operating revenues exceeding $401 million. The U.S. Class I railroads in 2009 were: BNSF Railway, CSX Transportation, Grand Trunk Corporation, Kansas City Southern Railway, Norfolk Southern Combined Railroad Subsidiaries, Soo Line Railroad, and Union Pacific Railroad.

7 The upward trend in intermodal traffic continued in the third quarter of 2010. For the week ending September 25, 2010, intermodal taffic was up by nearly 20 percent compared to 2009, and was also up 6 percent from the 2008 levels (AAR 2010b).