Intermodal likely to face volume headwinds due to economic uncertainty, analyst says

The only thing that’s certain these days, intermodal analyst Larry Gross says, is uncertainty.

And that makes it difficult to whip up an accurate short-term intermodal forecast, he told an Intermodal Association of North America webcast today.

But Gross says that gathering economic storm clouds — new tariffs, the end of an import surge, diminishing hopes for tighter trucking capacity, sagging consumer and business confidence, and the potential for stagflation — will not help intermodal volumes this year. “I see a lot more downside risk than upside,” he says.

Even with President Donald Trump set to announce broad tariff plans on April 2, Gross says there will still be uncertainty surrounding global trade.

“What we’ve seen here is that when there is a deal it’s never quite a done deal, but just a starting point for further negotiation,” Gross says about proposed tariffs. The administration, he notes, has typically modified its tariff plans based on concerns raised by various industries.

“So where things land and how long they stay that way is a big question mark,” Gross says. “And that is an important point because what that does is create continued uncertainty.”

Manufacturers, for example, are unlikely to make investments in new or expanded plants when there’s no certainty that tariffs will remain in place or last beyond the current administration, Gross says.

“It’s very hard to plan when you don’t know what the future reality is going to look like. So what that means in the near term for all of us is that there’s going to be very limited effects on the overall flows of international trade,” Gross says.

Supply chains won’t be able to change quickly, he says, and they won’t change until there’s clarity.

Roughly half of intermodal volume is international containers, while a substantial share of domestic intermodal depends on imported consumer goods that have been transloaded into 53-foot containers.

Yet concerns over potential tariffs prompted companies in the U.S. to pull forward their imports, which helped propel a surge of cargo landing at West Coast ports that boosted BNSF and Union Pacific international intermodal volume, as well as their domestic transload container volume.

BNSF’s intermodal volume is up 10% for the year to date, while UP’s volume is up an outsized 16%.

The rising tide of imports is one factor behind the 8.2% year over year growth in intermodal volume through the first 12 weeks of 2025, according to Association of American Railroads data.

“The surge is over, but the end of a surge doesn’t necessarily mean that we’re at the beginning of a huge decline,” Gross says.

The tariff pull-forward has changed the traditional seasonal traffic patterns. Typically, February would be a low point and import volume would begin growing in March. “I am not really too optimistic that we’re going to see that this year,” Gross says, noting that warehouse inventory is high and must be worked down before imports rise again.

Another wildcard, Gross says, is the U.S. Trade Representative’s proposed fees on Chinese-built or operated ships calling at American ports.

Vessels operated by Chinese companies would face a $1 million port call fee. Ships built in China would have to pay a $1.5 million fee per port call. And any shipping line that has placed more than 50% of its new vessel orders with Chinese shipyards would incur a $1 million port entry fee.

The White House says the fees would be used to subsidize the U.S. shipbuilding industry, which no longer produces commercial vessels in meaningful numbers. The administration says the plan also would reduce the global dominance of China’s shipyards.

The proposal was roundly criticized during public hearings last week. Gross says the pushback is likely to at least produce revisions to the plan.

“If it’s implemented as has been proposed, it has major implications in terms of rerouting trade flows,” Gross says. “And that could happen in a real hurry.”

Ships with ties to China would likely limit their U.S. arrivals to major ports at the expense of smaller ones, Gross says. Philadelphia, Baltimore, and Charleston, S.C., would be victims, Gross says, while winners on the East Coast would include New York/New Jersey and Savannah, Ga.

The proposal also might prompt importers to shift their U.S.-bound freight to Canadian and Mexican ports to avoid the fees, Gross says. That would boost the fortunes of Canadian National and Canadian Pacific Kansas City as overall Canadian cross-border intermodal volume has slumped due to labor unrest last year at the railways and ports.

The other wrinkle in international intermodal is the gradual shift of traffic back to East Coast ports. West Coast ports — particularly Los Angeles and Long Beach, Calif. — gained market share last year amid concerns of a potential dockworkers’ strike at East Coast ports.

With a new contract in place, shippers are now sending their imports back to East Coast ports.

“From a West Coast standpoint, we’re going have a double whammy of the lower imports in general, plus lower share,” Gross says. And that will be an intermodal headwind because containers that arrive at East Coast ports are less likely to move inland by rail due to shorter lengths of haul.

Domestic intermodal has more growth potential in the short-term, Gross says. Domestic intermodal has been slowly regaining market share from trucks for the past six months as truck capacity has tightened somewhat.

If there’s an economic downturn later this year, Gross says it may be an advantage for domestic intermodal. “History would say that in difficult economic conditions, particularly when people are not in a hurry, intermodal is able to gain share,” Gross says.

And that could boost intermodal’s fortunes. “I’m a little bit optimistic with regard to the share gain,” Gross says. “If we continue to gain share, that will more than offset any declines that we see in an overall volume.”

Railroad intermodal service should not be a barrier to domestic growth. By most measures, the Class I railroad intermodal networks remain fluid despite operating a tad slower than the average over the past few years, Gross says.