Why is drayage capacity the limiting factor for intermodal growth right now?

Regulatory compliance actions targeting trucking safety and hours-of-service violations have reduced driver availability and pushed some capacity out of the market. This has made short-haul drayage services scarce, even as intermodal demand is strong. STG's CEO stated the company could have done significantly more volume in Q2 if drayage capacity were available, indicating demand far exceeds supply.

How does STG's internal drayage coverage give it a competitive edge?

STG operates a fleet of 15,000 containers and provides its own drayage coverage on both ends of rail moves, rather than relying solely on third-party carriers. This vertical integration allows the company to control capacity, ensure service reliability, and protect margins against rising external dray costs—a key differentiator versus pure-play intermodal competitors.

What is modal conversion and why should supply chain teams care?

Modal conversion refers to shippers switching freight from trucking to intermodal rail service. Rising tender rejections, truck capacity scarcity, and rate pressure are driving new shippers to trial intermodal lanes historically served by over-the-road trucking. The CEO noted this requires network redesign and takes time, but customers who adapt tend to remain loyal, signaling stable long-term demand.

How does the UP-NS merger affect intermodal providers?

STG's CEO expressed measured optimism, noting strong rail service from all railroad partners over the past 12 months. His primary concern is preserving competitive, reliable service post-merger. Any consolidation that reduces rail competition or service reliability could negatively impact intermodal providers' ability to serve customers efficiently.

What is driving the surge in intermodal demand beyond typical seasonal patterns?

The article suggests structural factors: truck capacity tightness, rising tender rejections, regulatory compliance pressure on trucking, and tariff volatility. Port activity showed strength in late Q2 and early Q3, though some volume may be front-loaded ahead of tariff changes. These factors are pushing shippers toward intermodal as a more cost-efficient and reliable alternative.

Shipping & Freight

High Impact

Intermodal Demand Surges but Drayage Capacity Remains the Bottleneck

Aug 6, 2026

Get tomorrow's supply chain signal

Daily supply-chain brief. Free, unsubscribe anytime.

The signal

STG Logistics, an intermodal marketing company that emerged from Chapter 11 restructuring in July with new ownership from Fortress, Fidelity, and Invesco, is positioned to capitalize on a significant surge in intermodal demand. However, the company—and the broader intermodal sector—faces a critical capacity constraint: drayage availability. The company reported leaving volume on the table in Q2 2024 due to insufficient short-haul trucking capacity to move containers to and from railheads, a problem that persists into Q3. This capacity crunch reflects broader dynamics in trucking markets, where regulatory compliance actions have tightened driver availability and pushed costs higher.

Rising dray expenses are tracking with over-the-road rates, squeezing margins across the sector. B. Hunt, Hub Group, or Schneider—as intermodal's primary competition, suggesting a shift in freight modal choices as truck capacity becomes scarcer and tender rejections rise. Modal conversion is emerging as a structural growth opportunity.

New shippers are trialing intermodal lanes for the first time, driven by tight truck capacity and rising rates. With its recapitalized balance sheet, STG is investing in logistics capabilities beyond transportation, including transloading and warehouse consolidation services. This signals a potential broadening of intermodal value propositions and increased competition for 3PL and freight forwarding services.

#supply-chain-restructuring

#truck-capacity-crunch

Frequently Asked Questions

What This Means for Your Supply Chain

Simulation Suggestion

this month

What if drayage driver availability decreases by 20% over the next quarter?

Model the impact of further regulatory compliance actions or driver attrition reducing available drayage capacity by 20%. Simulate volume constraints, rate increases, and service level impacts on intermodal lanes from major origin-destination pairs (e.g., West Coast ports to inland distribution centers).

Run this scenario

Simulation Suggestion

strategic

What if modal conversion accelerates and 15% of freight shifts from trucking to intermodal?

Simulate a scenario where tender rejections and truck capacity scarcity accelerate modal conversion, moving 15% of historically over-the-road freight volume to intermodal lanes. Model impacts on: (1) drayage capacity utilization, (2) rail terminal throughput, (3) intermodal service rates, and (4) shipper network design requirements.

Run this scenario

Simulation Suggestion

this month

What if tariff uncertainty causes port import surges, spiking drayage demand by 25%?

Model the scenario where tariff changes or trade policy shifts drive shipper front-loading behavior, increasing port import volumes by 25% over 4-6 weeks. Simulate cascading pressure on drayage, intermodal rail networks, and warehouse consolidation services. Track service level and cost impacts on retailers and 3PLs managing inbound logistics.

Run this scenario

Go deeper:

Supply Chain Simulation: A Guide for Operators

What discrete-event, agent-based, and Monte Carlo simulation actually do, in plain language for supply chain leaders.

Get the daily supply chain briefing

Top stories, Pulse score, and disruption alerts. No spam. Unsubscribe anytime.

The signal

Frequently Asked Questions

What This Means for Your Supply Chain

Related Articles