Daily Tip: Intermodal Contract Savings Indices (IMCSI)

Ashley McAvoyDaily Tips

Did you know? You can see how much intermodal contract rates are in comparison to dry van contract rates.

Each day we’ll send you a daily tip designed to guide you to become a SONAR expert. If you have any questions, please contact your Customer Success Representative or email the team at cs@freightwaves.com.

Intermodal Contract Savings Indices (IMCSI): Using contract rate data, the Intermodal Contract Savings Indices show the percentage savings of shipping via domestic rail intermodal door-to-door  compared to dry van truckload.  

To ensure comparability across modes, the calculation only compares truckload and intermodal rates in identical origin-destination pairs. The IMCSI data is an aggregation of the percentage savings associated with individual lanes. 

SONAR Ticker: IMCSIF.USA

Analysts: Analysts who cover the truckload-based domestic intermodal companies (e.g., J.B. Hunt and Hub Group) will benefit from seeing the relative cost savings of intermodal because it will help them to better model intermodal volume. A relatively large intermodal savings percentage of >20% encourages shippers to utilize domestic intermodal, while a smaller savings percentage of <10% encourages shippers to utilize highway carriers to get the best possible service. 

Carriers: This data can help carriers price to the market. When intermodal savings exceed 10%-15%, it may mean that carriers can be a little more aggressive on pricing intermodal loads. A high intermodal savings percentage is a heads-up to highway carriers that provide premium service levels. It is very important to justify a steep premium over intermodal rates.  

Brokers: Some brokers are able to minimize purchased transportation costs for certain loads by utilizing domestic intermodal as a capacity source. Brokers can use the IMCSI data as a quick way of deciding whether sourcing intermodal capacity is worth the extra time and effort. 

Shippers: This data series is most directly relevant for shippers. Shippers with service requirements that are compatible with intermodal must decide whether the savings associated with intermodal, which varies with market conditions, is worth the typically lower intermodal service level, relative to truckload. 

The Intermodal Contract Savings Indices allow SONAR users to see the percentage savings associated with intermodal contract rates compared to dry van truckload, on a range of lengths of haul. Lengths of haul are broken down into long (>1,200 miles), medium (800 to 1,200 miles) and short (400-800 miles). Hauls of less than 400 miles are assumed to move by truckload and therefore, are excluded from the IMCSI data series. In general, intermodal savings should be a greater percentage on longer lengths of haul because rail (which has a lower per-mile cost) represents a greater portion of the overall door-to-door move. 

In addition, the IMCSI tickers are presented as two distinct data sets to reflect the timing of when the data was collected. The initial data sets (e.g., IMCSI1.USA) report values after 14 days, while the final data sets (e.g., IMCSIF.USA) report values after 56 days. The initial view is best for tactical decision-making (and to give a look forward to where the final data set is heading) while the final data set gives users a more complete view. 

The Intermodal Contract Savings Index (IMCSI) tickers are as follows: 

  • Intermodal savings, initial, all lengths of haul – IMCSI1.USA
  • Intermodal savings, final, all lengths of haul – IMCSIF.USA
  • Intermodal savings, initial, long hauls – LIMCSI1.USA
  • Intermodal savings, final, long hauls – LIMCSIF.USA
  • Intermodal savings, initial, medium hauls – MIMCSI1.USA
  • Intermodal savings, final, medium hauls – MIMCSIF.USA
  • Intermodal savings, initial, short hauls – SIMCSI1.USA
  • Intermodal savings, final, short hauls – SIMCSIF.USA

1)  Utilize the IMCSI1.USA and IMCSIF.USA tickers to see what percentage of the door-to-door freight bill intermodal contract shippers are saving relative to utilizing truckload contract rates. 

  • In the chart below, the final data set shows that intermodal shippers saved 22% compared to truckload. 
  • The initial data set suggests that the final intermodal savings data set is likely to decline in the coming weeks. 

2)  Utilize the LIMCSI, MIMCSI AND SIMCSI tickers to break down intermodal savings by length of haul categories:

  • Intermodal savings are greater on longer lengths of haul (>1,200 miles). 
  • There is less difference in savings between short and medium lengths of haul than there is between short, medium and long lengths of haul. 

Pro Tip: The nationwide outbound tender rejection rate (OTRI.USA) is a leading indicator for intermodal contract savings rates (in addition to truckload rates). Truckload contract rates are more volatile than intermodal contract rates. Therefore, as domestic freight markets tighten, the intermodal savings percentage generally increases. Conversely, as domestic freight markets loosen, the intermodal savings percentage generally declines. 

If you have questions about the Intermodal Contract Savings Index (IMCSI), please contact us at cs@freightwaves.com. 

Happy Hauling,

The FW Team