Insights - October 2016 - 5

EXPO - from page 3 along with reminders of EXPO's current theme: Insight, Innovation, Interaction. This issue of Intermodal Insights focuses on highlights from the education programming and opening remarks. It's the Economy Amid the fanfare, insights offered at the annual FREIGHTCAST panel urged caution. "We're in a recovery, but it doesn't feel that way," said Noel Perry, managing director of FTR. This is because the current recovery is slow - old and slow, according to Perry. The risk of recession is not imminent, but it does exist, and while the economy continues to grow at its lethargic pace, intermodal will face challenges of flat volume growth. Efficiency gains taking place in the over-the-road motor carrier segment will reduce costs significantly over the next 15 years, Perry continued, and that will present a particular challenge for intermodal longer term. "The next recession will be made in China." - Larry Gross, partner and senior consultant for FTR Brandon Oglenski, director and senior equity analyst for Barclays, indicated similar views on the maritime side and in international shipping. "Maritime doesn't make money, and that's going to be hard to fix," he declared. Operating margins are negative to flat. "The industry is on an unsustainable path and there is no incentive for the first person to lose market share," he commented. It's not clear which ocean carrier would be the first to hold rates at profitable levels and lose customers to those who do not follow its lead. Innovations by ocean carriers to retain market share and reduce unit costs have included putting larger vessels into service, and overcapacity has been the result. "How do we get capac- The Student Competition winners were (from left) UW-Superior's Jacob Irlbeck, Gavin Johnson and Hayden Norris. Dr. Richard Stewart, professor of transportation and logistics at the University, also shown. UW-Superior Lives Up to Its Name at EXPO A student team fielded by the University of Wisconsin-Superior won IANA's sixth Intermodal EXPO Academic Challenge, earning the university its first victory. The other competing undergraduate schools, all IANA Scholarship Award recipients, included the Universities of Maryland, North Florida, North Texas, Georgia Southern University and the College of Charleston. Since the Scholarship Program's inception in 2007, IANA has awarded over $1.7 million to support students in university programs focused on freight and intermodal transportation. ity out of the marketplace?" Oglenski asked rhetorically. Hanjin's bankruptcy could be a start, but without significant growth in global trade, capacity is not being removed fast enough. Larry Gross, partner and senior consultant for FTR, concluded the outlook, remarking that intermodal largely depends on factors outside its control. As one example, FTR's Perry offered the observation, "Everyone has overdosed on China's growth." China is sitting on a number of bubbles, he noted, leading Gross to add, "The next recession will be made in China." Reflecting on Change The growing preference for intermodal was the subject of the secondday keynote by Matt Rose, executive chairman of BNSF Railway. He kicked off his comments by offering contrasts between the current state of intermo- dal and the world into which IANA was born. With a nod to the many pioneers who helped the industry grow, Rose said intermodal now has a seat at the table. Among Rose's observations from the era when IANA was being launched, he pointed out some of the innovations that helped intermodal take hold and grow, including standardized steel containers and the interlocking connectors that contributed to the creation of the stack train. The challenges for railroads and the development of intermodal included the fact that the price of diesel fuel was 72 cents per gallon and coal was 43 percent of the volume hauled by rail. Coal is now less than 14 percent of U.S. volumes. "Now containers and trailers travel 25 billion miles across the North American intermodal EXPO - continued on page 7 October 2016 | Intermodal Insights 5

Table of Contents for the Digital Edition of Insights - October 2016