Intermodal contract rates jump 12% on transcon lanes — diesel did most of it

Transcontinental intermodal contract rates, fuel included, are up more than 12% year over year in the fourth quarter, with shorter Eastern lanes gaining close to 9%. Strip out fuel, and the real increases shrink to about 5% and 2% respectively. Most of the headline move, in other words, is diesel wearing a contract-rate costume.

The figures come from FreightWaves SONAR's invoice-based contract indices (IMCRPM.TRANSCON and IMCRPM.LOCALEAST), which include fuel surcharges and lag actual freight movement by a few weeks. Intermodal contracts typically reset annually around year-end, so the data is now catching the front end of the new bid season.

How much of the increase is fuel?

Quite a lot. Fuel explains roughly two-thirds of the transcon increase and three-quarters of the Eastern one, based on how tightly the indices have tracked diesel. The mechanics are visible in two sharp jumps over the past year:

• Diesel rose roughly 50% in March and April; the transcon contract index followed with a 6% climb from April to May.
• Diesel climbed about 36% from July to September; the index responded with a 10% rise from August to October.

Here's the wrinkle. A common published intermodal fuel surcharge schedule would imply an even larger fuel effect — more than the entire increase in either index. That mismatch suggests larger shippers have negotiated their own, gentler surcharge tables. The nuance matters because service providers look at the total rate, surcharges included, when they sit down to negotiate.

J.B. Hunt, which runs one of the biggest intermodal books in the country, said it secured only low-single-digit rate increases in the bid season that closed in September. That squares neatly with this data. High fuel surcharges were probably why the increases weren't larger — the total rate was already elevated, and the surcharge was doing most of the work.

What does this change for shippers?

A larger fuel surcharge share means more price volatility. If you sign when fuel is high, the total rate has more room to fall over the contract's life. Keep fuel a smaller share, and costs stay steadier through the year — but you capture less benefit when diesel drops. Fuel surcharges aren't meant to be a profit center for carriers. They're a mechanism for sharing fuel risk, and volatile diesel sharpens the dilemma on both sides of the table.

The market, meanwhile, suggests intermodal has room to run. The Intermodal Contract Savings Index (IMCSI), which measures the average gap between comparable truckload and intermodal lanes, still shows a 30% savings for intermodal — down only slightly from a peak of 33% in June. Even after this quarter's jump, the rail box remains a deep discount to the truck.

Most of the increases should be fully reflected in the data in the coming weeks, which will show more clearly where intermodal lands relative to trucking. Two recent reminders that rail has its own fragility: the weather-related BNSF washout in New Mexico and the CSX technical outage. Shippers don't seem to mind much — volumes have largely recovered, and intermodal growth is still running around 7% annualized. The expectation is that rail stays a strong cost-saving alternative for the foreseeable future.