Intermodal gains momentum as costs and demand shift

Market overview

The North American intermodal market is beginning to show early signs of recovery. First quarter volumes are expected to finish slightly above prior-year levels, despite difficult comparisons to 2025 when tariff-driven pull-forward activity elevated demand. With winter-related disruptions largely behind the market, intermodal activity has started to regain momentum.

Looking ahead, modest demand growth is expected through April, with the potential for stronger acceleration in the second half of 2026, depending on continued trends within the truckload market.

2026 seasonal positioning

Following a muted high season in 2025, Southern California has returned to more normalised conditions as trade flows between the U.S. and China stabilise and tariff policy becomes more predictable. This shift has already contributed to an early uptick in demand through key port gateways.

Shippers may benefit from securing committed rail pricing in the near term, as transactional rates are expected to increase heading into high season. More broadly, intermodal adoption continues to expand nationwide. Throughout the first quarter, many shippers increased their use of intermodal solutions to help offset rising truckload costs and improve overall network efficiency.

Spot market dynamics

Rail spot pricing remains competitive and generally aligned with truckload rates for now. However, this dynamic is expected to shift. Truckload pricing is projected to increase at a high single-digit pace in the second quarter, while intermodal rate increases are expected to remain in the low single digits. This widening gap is reinforcing intermodal’s cost advantage, particularly in Southern California, the Southeast and the Midwest, where over-the-road capacity is tightening.

Demand is increasing most notably in the 550-to-1,500-mile range, as freight that shifted back to truckload during the downturn begins to return to intermodal. At the same time, several factors are contributing to tightening truckload capacity, including rising diesel costs, increased selectivity among drivers, strict commercial driver’s licence (CDL) and English language enforcement and evolving cross-border regulations that are limiting capacity near the southern border.

Fuel cost impact

National diesel prices have risen over $5.464 per gallon to start April, the highest level since 2022, with fuel surcharge programs adjusting accordingly based on national index benchmarks. In addition, global delivery disruptions, particularly across key Middle East corridors, are contributing to higher transportation costs through longer transit routes and increased fuel consumption.

Fuel structure differences between modes remain an important consideration. Intermodal fuel is typically calculated as a percentage of linehaul, while truckload fuel is generally applied on a per-mile basis. Applying truckload-style fuel tables to intermodal deliveries can lead to inflated costs and erode expected savings.

Aligning fuel programmes to mode-specific structures can help preserve cost advantages, particularly as diesel prices stabilise. Elevated fuel costs are also contributing to tighter truckload capacity, as smaller carriers face margin pressure and, in some cases, exit the market.

Intermodal pricing outlook

Committed pricing for 2026 varies by region. West Coast outbound lanes are trending higher, with many contracts activating in June or later in anticipation of high season demand. In other regions, pricing is generally seeing modest increases in the range of 2 to 5 per cent year over year, largely in line with inflation.

Fuel strategy remains a critical lever in overall transportation cost management, as misaligned fuel programmes can offset intermodal savings. As procurement cycles progress, shippers may benefit from prioritising providers with strong rail partnerships to support both cost efficiency and capacity reliability.

Evaluating total landed cost, identifying lanes where intermodal meets transit requirements and implementing blended modal strategies can help to reduce exposure to market volatility. Piloting new intermodal lanes ahead of further truckload inflation may also improve access to capacity.

Service performance

Service performance across Class I railroads remains stable. Key operating metrics, including train speeds, terminal dwell times, locomotive utilisation and held trains, continue to show improvement or consistency. Recent service disruptions have been limited and largely driven by weather-related events rather than systemic issues.

While overall network capacity remains available, equipment positioning is expected to become increasingly important as regional demand shifts and imbalances develop.

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