The Effect of Supply Chain Issues on Intermodal Freight
As the supply chain crisis continues in the United States, concerns of inflation affecting consumer goods are permeating the conversation. What should also be of note is the rise in prices to move goods. At every point in the supply chain, goods must be moved to their next destination smoothly to keep everything operating. If there any hiccups in the process, the ripple effects are seen in every part of the chain.
In the current state of intermodal, there is a great demand to fill containers and get them moved and only a limited amount of container supply. Combine this with equipment shortages and the cost to move these containers goes up.
The issues of today’s supply chain presented an opportunity for us to investigate our own data and see how the cost to move intermodal has changed. We looked at the average cost it takes for carriers using the DrayNow app to move containers to and from the rails, the first and last mile of intermodal freight transportation.
The data shown above is based on the average rate per mile week-to-week starting at the beginning of August (8/2-8/8) through the fourth week of November (11/22-11/28). Based on this data, it is very apparent that the price to move intermodal freight has risen through the last few months of 2021.
From the graph, it’s clear that rates fluctuated week-over-week, but they have been trending up overall. Taking a closer look at the difference four months makes, average rates in the fourth week of November were up 35% compared to the first week of August. The difference between the minimum (week of 8/9) and maximum (week of 11/22) is much greater, at a 45% increase in price to get containers moving.
Besides supply chain congestion, another factor for this cost increase is the sharp rise in diesel prices that has occurred in the latter part of this year, with some markets seeing 12% price hikes between August and November. Intermodal carriers can make more of a net profit when diesel prices rise due to fuel savings and the short distances on each trip, but price increases this high warrant a rate hike.
As we continue into the holiday season, it’s likely that the cost to move intermodal freight will only keep going up. And with these costs rising, it can be difficult to determine what is the best price for a move. As a freight marketplace, DrayNow technology can give users insight into current market conditions, and therefore they can find the right price to get freight moving.
The cost to move freight is rising, and the data shows it. With an uncertain future and lingering supply chain issues, it can be difficult to assess what it will take to get capacity for your intermodal freight. Learn more about how DrayNow technology can benefit intermodal customers at our site.
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