As originally published in The Journal of Commerce “Like a great battle of lore, the intermodal industry probably is in the final chapters of the conflict between trailers and containers. The history of these two equipment types parallels the history of transportation in the United States.” The history of these two equipment types parallels the history of transportation in the US. Domestic intermodal arose after World War II with trailers as the preferred asset. As the highway trailer grew in length and width, the railroads strove to keep up. Containers were for oceanborne cargo, and railroads handled this business almost as an afterthought. All of this changed in the late 1970s as international cargo volumes exploded and double-stack technology evolved. Some railroads embraced this new business model. Others resisted. Thirty-five years later, the results of these decisions are still evident. When the ports of Los Angeles and Long Beach wanted to build an Intermodal Container Transfer Facility, only Southern Pacific (SP) took part. Union Pacific was able to overcome this omission by merging with SP 20 years later. Santa Fe (now BNSF) never recovered from its refusal. Although BNSF has tried to remedy this oversight by building the Southerm California International Gateway, it hasn’t broken ground. In 1989, J.B. Hunt (the man and the company) realized his truckload advantage was disappearing and he signed a deal with Santa Fe to cannibalize his long-haul truck business with intermodal. Originally a joint venture named “Quantum” that was to use trailers, Hunt quickly saw the benefits of domestic containers and converted. This decision, so obvious today, was a second bet-the-company move. A decade of struggle followed — the company almost abandoned intermodal — but it emerged as an intermodal butterfly after its metamorphosis from a truckload carrier. Major truckload carriers, convinced of their righteous commitment to trailers, ridiculed Hunt’s container decision. They were wrong and some belatedly converted to containers. They discovered how hard it was. And still, over a decade later, they are striving to emulate J.B. Hunt’s ruthless intermodal efficiency. Domestic containers aren’t trailers, and good intermodal operators must unlearn truckload tenets. This is often culturally difficult when they refuse to become an intermodal company with trucks in favor of remaining a half-pregnant truckload carrier with intermodal. Nevertheless, railroads supported trailers as a gateway to full domestic containerization, and as long as UPS relied on trailers, there was sufficient network density for trailers. Two things changed in the last 10 years, however: UPS started using domestic containers, and network capacity, especially in terminals, became constrained. Running a vanilla terminal with one type of traffic (domestic or ISO containers, for example) is difficult. Each additional equipment type increases complexity exponentially. Two recent trends are evident: Trailer rates have increased much more than other rates, and railroads have started canceling trailer service. (Look no further than Chambersburg, Pennsylvania, a CSX ramp built specifically to attract truckload traffic, which is now container-only.) Some would counter that the recent rise of trailer volumes points to a trailer renaissance, but these are generally viewed as desperate moves by truckload carriers with no drivers. Railroads will retain some of this business — in fewer corridors — but drastically escalated rates will reflect the inelastic nature of this demand. BNSF recently informed its trailer customers that ramps in Willow Springs and San Bernardino, California, would be trailer-free by the end of 2018. In their stead, customers who fail to convert to containers will need to use Joliet, Illinois, and Hobart, California, respectively. Both terminals have geographical expense issues, and Hobart has been a high-wire-blivit operation for 20 years, handling all three equipment types — while growing volumes almost in defiance of accepted norms. The problem for trailer customers is how to respond to higher rates and reduced network choice. Because most truckload carriers have a common fleet for highway and intermodal, it’s difficult to separate them. And even if they’re willing to replace their highway fleet with containers, the transition will be difficult operationally and challenging financially as they try to maintain a pricing distinction between the two. They will have to abandon their sales approach that sold trailers as a better product and overcome their operational ignorance when most of the industry’s talent is restricted with non-compete agreements. It appears containers will finally prevail. The question is how the current trailer providers will adopt and how shippers will respond to container rules.