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10/13/2026
By Jeff Stagl, Managing Editor
The North American intermodal sector is “having a moment.” As in experiencing an extremely encouraging and unexpected-in-a-good-way period.
That’s how a number of speakers at the Intermodal Association of North America’s (IANA) annual expo last month in Long Beach, California, characterized the sector.Although there are many negative factors that should be driving down volume, the number of containers flowing through the continent is up. Surprisingly way up.
In 2025, intermodal volume rose 2.3% to 18.5 million units, the second-most total units in a given year, according to IANA statistics. And volume so far in 2026 is besting that level.
IANA data through August shows North American intermodal volume totaled 12,723,569 units, up 3.1%. The number of domestic containers climbed 8.2% to more than 6.1 million while the number of international containers dipped 1.5% to more than 6.2 million.
The domestic-volume drivers include a moderate level of consumer spending despite economic uncertainty; a data center boom driven by the explosion of artificial intelligence; an uptick in manufacturing; constrained trucking capacity; an ongoing truck driver shortage; rising truck rates; high diesel prices; and stricter trucking and driver regulations in California.
So far, the intermodal industry has overcome some problematic developments that typically would hamper overall container activity. Among them: Ocean-carrier disruptions at seven key sailing points, including the Suez and Panama canals and the Strait of Hormuz; a tight chassis supply; and an unpredictable economy that’s still precluding some shippers from trying intermodal since it tends to be slower, less flexible, and restricted by weight limits and geographic boundaries compared with trucking.
The key for all intermodal players is to not just stay in the moment but ensure the moment lasts a long time, various IANA expo speakers stressed.
And that’s exactly what Union Pacific Railroad is trying to do — and has been fixated on doing for quite a while. Especially for domestic intermodal traffic.
The Class I aims to have sufficient capacity, optimal operational performance, and a buffer of resources to support and spur domestic traffic.
There already has been some spurring. Through the year’s first half, UP’s premium business (which includes intermodal, finished vehicles and automotive parts) registered a 21% hike in revenue to $2 billion and a 4% increase in volume to 1 million units compared with first-half 2025 figures.
On an annual basis, premium business accounts for half of total volume and about one-third of total revenue.
“Intermodal is very important to us,” said UP CEO Jim Vena during his Sept. 15 keynote address at the IANA expo.
One area that’s extremely important to UP’s domestic intermodal business is southern California. The Los Angeles basin serves as a vital business-growth gateway for the large container volumes generated by the ports in Los Angeles and Long Beach.
The basin is a massive warehouse, distribution center and fulfillment facility hub. The area offers shorter drays, better competition with long-haul trucks and fast rail corridors to major U.S. markets, such as three-day service to Chicago.
“This is a critical part of our network. There is a lot of demand in the area,” said UP Executive Vice President of Marketing and Sales Kenny Rocker during a Sept. 8 interview. “There is 650 to 700 million square feet of industrial inventory space in the area. And the good news is, the vacancy rate is in the single digits.”
Within the basin, UP operates five intermodal terminals: the LA Intermodal Terminal on East Washington Boulevard; Los Angeles Transportation Center terminal near downtown LA; Inland Empire Intermodal Terminal (IEIT) in Bloomington; Intermodal Container Transfer Facility (ICTF) in Long Beach; and a terminal in Industry. Only the ICTF handles both international and domestic intermodal loads, while the other four terminals handle solely domestic traffic.
Over the past five years, UP has allocated $1.2 billion to expand its entire network’s intermodal footprint and prepare for future volume growth. Millions of dollars spent at the IEIT have been a significant part of that total investment.
Opened in 2021, the IEIT is located within 10 miles of a massive concentration of regional warehouses and distribution facilities, which helps reduce the drayage distance from the two major ports nearby.
UP has expanded the IEIT five times over the past five years and currently is working on the sixth expansion, which is targeted for completion in early 2027. That project involves adding more working track and repurposing the entire receiving yard as intermodal capacity. The expansion will enable customers to move their freight more efficiently and create new opportunities to convert over-the-road freight to rail, UP officials say.
Prior work completed at the terminal last year included converting its hump receiving yard into an intermodal ramp, improving ingress/egress and mainline run-through capacity, and adding a nine-mile stretch of second main track between South Fontana and Bon View, California, to support premium service. Earlier in 2026, the railroad re-created receiving tracks and repair-in-place car repair tracks at the IEIT’s hump yard bowl.
UP projects that from 2023 to 2026, the IEIT’s revenue shipments will achieve a 16% compound annual growth rate.
“It’s hard to believe the Inland Empire was initially just a pop-up intermodal facility. We have been expanding it to gain a larger footprint,” said UP EVP of Operations Eric Gehringer during a Sept. 8 interview, adding that a seventh IEIT expansion is on the drawing board. “Our customers want us to be there.”
UP also is reconfiguring portions of the West Colton Yard in Bloomington for intermodal use and creating additional capacity at nearby Montclair Yard to support manifest operations, improve network fluidity and support continued traffic growth across southern California.
There is a lot of traffic potential in the basin area, said Rocker. Rail has only 27% of the total transportation market, which is a small share, he said.
“The natural order of demand in southern California tells us we should expect to continue growing,” said Rocker.
In addition, there is still capacity available in the area, even in locations closer to the ports, and vacancy rates are low, he said.
“We have seen a leasing surge of late. In the second quarter, 16 million square feet was leased, the most since in the fourth quarter of 2020,” Rocker said. “We have seen leasing go up 31% in the Inland Empire area.”
Terminal expansions will continue to ensure UP is getting the most out of its facilities and assets, said Gehringer.
“For almost every terminal we have, we have an expansion designed and on the shelf so we can proceed when needed,” he said.
But beyond “putting iron in the ground,” there’s another way to expand capacity, Gehringer stressed.
“We also can gain more efficiencies at terminals — and that’s capacity,” he said.
To that end, the Class I continues to seek ways to land trains faster and unload containers more quickly.
“Every minute counts. We have shaved hours off, so now it’s not a matter of hours, it’s a matter of minutes,” said Gehringer. “Technology helps speed processes.”
For example, precision gate technology UP is deploying at terminals saves truck drivers 10 to 20 minutes at the facilities. In addition, the railroad is working on developing an automated inventory of containers and trying to provide more well-defined maps of terminals.
And in terms of addressing both technology and efficiency, UP last month took delivery of two FLXdrive battery-electric locomotives from Wabtec Corp., the first batch of four FLXdrives on order. Powered by about 7,000 battery cells, the locomotives will be tested at the IEIT and in the LA area to gain operating environment insights. UP is seeking test data on the FLXdrive’s performance, reliability and operational capabilities.
The Class I also is trying to do some things on a much smaller scale — such as offering clean restrooms — to help ensure intermodal traffic comes and flows at its terminals.
“We want to be the ramp that a customer wants to go to,” said Rocker.
But a shipper might not use UP’s terminals or intermodal services if its operational performance isn’t up to snuff. To that end, the railroad has been focused on improving performance.
In the second quarter, its intermodal service performance index reached 95%, demonstrating an ability to execute on the fundamentals and support double-digit domestic intermodal growth at very high service levels, said Rocker.
Yet there still are opportunities to improve performance, and UP remains committed to providing consistent and reliable service while growing with customers, he said.
The railroad also is steadfast in trying to more effectively use its buffer of resources — which includes locomotives, cars, other equipment and manpower — to be more agile and react faster to market changes.
For example, there are 500 locomotives on hand that can be distributed quickly within 48 hours if necessary, said Gehringer.
In addition to all its maneuvers in southern California, UP continues to address new intermodal market demands by building, expanding or enhancing terminals in other fast-growing areas. Over the past four years, the railroad has built new terminals in Phoenix, Minneapolis and Kansas City, Missouri.
Moreover, upgrades and enhancements were completed at terminals in Minnesota’s Twin Cities and Lathrop, California. The work has enabled UP to add nearly 1 million units in incremental lift capacity since 2021.
“We just opened the Phoenix terminal [in 2024] and we are already adding capacity that will double it,” said Gehringer. “Our customers demand we grow with them.”
Transportation market intelligence firm ACT Research Co. recently found that freight demand growth remains most pronounced for moves traveling in the 550- to 1,500-mile range, where freight that shifted to trucks during softer market conditions is now returning to intermodal. Plus, Class Is now are providing stronger and more consistent service, with fewer held trains, more reliable train speeds and reduced terminal dwell times, according to ACT.
That bodes well for UP’s attempts to build intermodal business in southern California and throughout its network. In the second quarter, domestic intermodal volume and revenue reached records for the fourth-straight quarter. And UP leaders expect more of the same, based on the railroad’s efforts to boost capacity, bolster service and maintain a strong buffer.
“It’s evident our outstanding service set the foundation to grow the business,” Rocker said July 23, when UP reported its Q2 financial results. “That’s exactly what we’re doing.”