Charleston Investing In Intermodal Growth Story

Intermodal traffic at the US port of Charleston has continued to increase, with volumes growing by 18% year on year (y-o-y) in 2013. The port is investing in its intermodal connections as it prepares to expand its role in the US container supply chain following the expansion of the Panama Canal. BMI highlights that the growth in intermodal traffic is part of a wider trend in North America, with rail freight operators' intermodal operations expanding in line with the country's recovering consumer outlook and a strategy of diversification by rail cargo operators away from commodities transport.

Intermodal rail traffic at the port of Charleston, the US' 10th largest container port, has increased by 18% y-o-y to reach 145,000 containers. This marks a 50% increase in intermodal volumes since 2011. The rail terminals that service the port are located 15 miles away from the facility in Northern Charleston. In 2012 the port launched its RapidRail program, with trucks shuttling containers from the port to rail terminals. The port's rail intermodal services are operated by CSX and Norfolk Southern.

Intermodal traffic accounts for the transport of just 9% of the port's total container throughput volume, but with the facility's container levels projected to rise, there is further growth potential for intermodal operations at the port. In 2013 the port handled a total of 1.6mn TEUs, an annual increase of 6.8%. Over the medium term (2014-2018) we project the port's container throughput to increase by 44.9%, an annual average of 7.7% to reach a forecast 2.3mn TEUs in 2018.

More Containers = More Intermodal Demand
Port of Charleston Container Throughput (TEU) and y-o-y % Change

Intermodal traffic at the US port of Charleston has continued to increase, with volumes growing by 18% year on year (y-o-y) in 2013. The port is investing in its intermodal connections as it prepares to expand its role in the US container supply chain following the expansion of the Panama Canal. BMI highlights that the growth in intermodal traffic is part of a wider trend in North America, with rail freight operators' intermodal operations expanding in line with the country's recovering consumer outlook and a strategy of diversification by rail cargo operators away from commodities transport.

Intermodal rail traffic at the port of Charleston, the US' 10th largest container port, has increased by 18% y-o-y to reach 145,000 containers. This marks a 50% increase in intermodal volumes since 2011. The rail terminals that service the port are located 15 miles away from the facility in Northern Charleston. In 2012 the port launched its RapidRail program, with trucks shuttling containers from the port to rail terminals. The port's rail intermodal services are operated by CSX and Norfolk Southern.

Intermodal traffic accounts for the transport of just 9% of the port's total container throughput volume, but with the facility's container levels projected to rise, there is further growth potential for intermodal operations at the port. In 2013 the port handled a total of 1.6mn TEUs, an annual increase of 6.8%. Over the medium term (2014-2018) we project the port's container throughput to increase by 44.9%, an annual average of 7.7% to reach a forecast 2.3mn TEUs in 2018.

More Containers = More Intermodal Demand
Port of Charleston Container Throughput (TEU) and y-o-y % Change

Strong internal freight connections into the US are vital for the port of Charleston if it is to increase its role in the US' container supply chain. The port located on the US' East Coast is one of the facilities that we have highlighted as set to benefit from the Panama Canal expansion. The expanded Panama Canal, which is currently scheduled to be launched in June 2015, will be able to cater for larger vessels and so will offer shippers the logistics option of shipping containers via the waterway into the US East Coast, closer to the country's major consumer hubs, rather than the current route of shipping goods into the US West Coast ports and then freighting them across half the country.

To be able to play a role post-Panama Canal expansion the port of Charleston will require developed internal freight transport connections and intermodal will play a major role. Investment is already underway to increase the port's intermodal offerings. In November 2013 the port opened its South Carolina Inland Port in Greer. The terminal offers upstate rail connections via Norfolk Southern's railway network and also functions as a facility where containers can be stored, thereby freeing up space at the port of Charleston. Further investment into the port's intermodal connections is planned, with a new intermodal container transfer facility due to be built in Northern Charleston in 2018.

BMI notes a trend of growth in North America's intermodal sector. As highlighted CSX and Norfolk Southern are the railroad operators that connect the port of Charleston with the US rail network and both have recorded growth in their intermodal operations. In 2013 the revenue tonne-miles of CSX and Norfolk Southern intermodal operations increased by 6.0% and 4.9% respectively.

Consumer Of Commodities
LHC: CSX and Norfolk Southern Revenue Tonne-Miles % Change y-o-y. RHC: Total Household Spending, per capita (US$) and US Real GDP Growth, % y-o-y

We expect greater focus from both firms on their intermodal operations over the medium term for two reasons. Firstly the volume of coal transported by rail is shrinking, with CSX's volumes down 4% y-o-y in 2013 and Norfolk Southern's coal trade dropping by 1.5%. Secondly the improving consumer outlook in the US will bolster demand for intermodal freight options. In 2014 we project the US economy to expand by 2.8%, a strengthening on the 1.9% y-o-y increase estimated for 2014. Over the medium term, we project the country's real GDP to expand by an annual average of 2.5%. This will filter down to have a positive impact on consumer spending and by extension for consumer goods, which are freighted by container. Over the medium term we project the US' total household spending per capita to expand by 18%, a much more robust growth outlook than the 10% growth recorded in the previous five years (2009-2013).

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Sector: Freight Transport, Shipping
Geography: United States
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