Intermodal demand steadies amid shifting freight dynamics

Market overview

Intermodal rail volumes softened through late 2025, with shipments down roughly 3% year over year (y/y) in November. This decline largely reflects an early-year import surge tied to tariff concerns, which pulled forward typical seasonal demand. Looking ahead, intermodal demand is expected to remain flat to modestly positive, in line with broader freight market trends.

With the 2026 peak season concluding in mid-December, Southern California is entering a period of semi-normal operations as the U.S.-China trade framework remains stable. Shippers revisiting outbound intermodal from the West Coast now have an opportunity to secure favorable coverage for the first quarter.

Across the wider network, interest in converting truckload shipments to intermodal surged over the holidays due to tightening over-the-road capacity, a trend that continues through requests for proposals (RFPs) as shippers target cost savings, particularly on longer-haul lanes where intermodal offers clear value.

Spot market dynamics

Railroads are maintaining competitive spot pricing aligned with truckload rates, keeping rates steady until truckload markets strengthen. Outside of California, spot pricing is expected to remain stable through early 2026. Tightening truck capacity, driven by trucking economic conditions and stricter licensing and driver regulation enforcement, reinforces intermodal’s attractiveness as an alternative in many markets.

Rail merger update

Union Pacific (UP) has formally proposed a merger with Norfolk Southern (NS), which, if approved, would create the first transcontinental railroad in U.S. history. The U.S. Surface Transportation Board is reviewing the proposal, which is expected to take up to 16 months to complete before an announcement is made.

Service performance

Class I carriers ended 2025 with strong service performance, featuring stable train speeds, reduced dwell times, lower idling, and fewer trains held in transit. While the network retains adequate latent capacity, strategic equipment positioning remains essential as railroads manage shifting demand patterns.

Service improvements are already under way, including BNSF and CSX introducing nine new intermodal schedules from California to the Ohio Valley and Northeast, UP reducing priority service from Los Angeles to Chicago to three days, and NS and UP launching new outbound service from Louisville, Kentucky, to the West Coast. These enhancements are increasing speed and flexibility across the network.

Intermodal pricing outlook

Committed pricing trends heading into 2026 show regional variation. West Coast outbound rates are stabilizing, with most new contracts beginning January 1 or later, while other regions are experiencing modest y/y increases of 2-5%, consistent with broader inflationary patterns. Shippers participating in RFPs are advised to include carriers with broad rail partnerships to maximize potential savings.

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