Before getting into the discussion of the future growth and role for international intermodal. U.S. manufacturing executives should understand it is worthwhile to understand some of the basic economics of intermodal rail transportation and why the mode is not only here to stay but is an integral, ongoing part of the world's logistics system. First, intermodal is cheaper than truck for distances beyond 500 to 700 miles, and is approximately half the cost of truck in cents per mile beyond 1,000 miles. Ride quality from doublestack container cars is superior, and intermodal is capable of moving past congested highways. So the fundamentals are all there. In places like China where there's little infrastructure outside of the coastal cities, both highways and railroads are being built, but it's intermodal that's being depended on to move the country's freight.

Back in America, international intermodal growth is projected at between 5 and 6 percent per annum over the next several years, approximately the size of import growth, and twice the growth of GDP. What's changing is intermodal's role and its use in the supply chain. In the Transpacific trade, the world's largest containerized lane, the West Coast share of inbound traffic peaked in 1997 at 85 percent of the trade. All water services to the East and Gulf Coasts have been edging up their share in recent years, although the West Coast share is still 84 percent. And of the West Coast volumes, international intermodal usage eastbound continues to grow (it should be noted that West Coast volumes ramp up in absolute volume, independent of the percentage share numbers).

All water services to the East Coast from the Pacific are limited by the size and capacity of the Panama Canal, except of course for Suez services. The increase in Panama Canal sizing will help the all water services in years to come. The Southeast has been the biggest gainer in the all water segment, with Savannah the leader helped largely by government incentives and the initiatives of a few large importers like Wal-Mart and Home Depot. But a crucial factor in the conversion to all water by manufacturers is speed. Intermodal can reach major markets as much as a week faster than all water. Thus there may be some limits on the growth of all water and away from intermodal.

A more significant trend in the use of intermodal is the increase in transloading, freight manipulation and postponement strategies, particularly by large retailers, where these companies de-van containers with Asian origins, re-define what products should be routed to what markets to meet the most current demand projections, and use a crossdock operation to load inbound (and now domestic) equipment. Intermodal still is an integral part of the transload system, but the move in the U.S. is domestic and frequently contains both international and domestic production.

Another trend with intermodal as a basic element is the increase in the use of Canadian ports serving both Canadian and U.S. markets. Canadian railroads have developed joint services with the ports, including the joint investment in facilities and equipment as in Vancouver, and intermodal service represents the connecting leg. Inland U.S. markets represent an attractive target for these Canadian port-railroad ventures, and the acquisitions of U.S. railroads by Canadian firms makes that service very possible.

So is international intermodal maturing? Hardly. Its fundamental economics demand continued use for both shippers and carriers who are mindful of costs. The applications and usages of intermodal continue to develop, with creative solutions being developed on a regular basis. Couple that fact with the domestic intermodal market, which is roughly equal in number of moves to the international, and there's critical mass to improve service coverage, reach more points directly, and increase service frequency. The fundamental economics, the network scale and the energy and environmental attributes of intermodal foretell a continuing bright future. WT