RDI Reflects Merchandise Momentum; U.S. Domestic Intermodal Outperforms

Research evidence excerpt

RDI Reflects Merchandise Momentum; U.S. Domestic Intermodal Outperforms

IANA separates international from domestic containers (equipment) and provides geographic

disclosure (details that railroad AAR data does not). See Exhibit 2 for total, international,

domestic 53-ft, Mexico, Canada, and USA-USA volume charts.

Strength in the U.S. domestic intermodal market persists; U.S. rails continue to benefit from

truck-to-rail conversion. The U.S. continues to deliver very strong domestic intermodal

growth, with volumes originating and terminating within the U.S. +6.0% y/y (representing

the highest May volumes reported since 2018). With easing comps ahead, accelerating

domestic intermodal volumes are anticipated to have a compounding benefit for the U.S.

rails (as structural capacity tightening and elevated fuel costs offer incremental share

capture). Intermodal savings appear to be elevated, with the spread between contract

intermodal and contract truckload rates being at the highest levels observed since 2022—

truckload market trends suggest incremental upside for contract rates, perhaps driving

further intermodal savings.

U.S. rail intermodal volumes are trending up MSD-HSD% QTD (we estimate CSX carloads

+8.3% y/y, NSC carloads +5.1%, UNP RTMs +4.9%), with momentum accelerating through

June. While the North American rails appear generally well positioned to handle the influx in

demand, reports suggest strain is emerging in final-mile drayage movements as the speed

of the shift from truckload to rail intermodal has caught drayage fleets flat-footed.

Commentary from drayage providers suggests a notable shift in demand trends year to date;

drayage providers have transitioned from having difficulty securing capacity one day out to