After a rough first quarter largely blamed on a brutal winter, several rail intermodal executives journeyed to the warmth of Tucson, Ariz., site of the Transportation Intermediaries' Association's annual conference, to lick their collective wounds.

The salve for intermodal folk is that the spring thaw has seemingly released pent-up demand stifled by service problems during the unusually harsh winter months. For the week ending April 5, U.S. railroads reported intermodal volumes rose 12.6 percent over year-earlier levels, according to data released yesterday by the Association of American Railroads (AAR). This followed a 9.9 percent year-over-year increase in March, the group said. So far in 2014, intermodal volumes are up 4.4 percent over the same period in 2013, AAR said.

The warmer weather hasn't come soon enough for rail executives, whose networks were calcified by Mother Nature's wrath, leading to equipment imbalances, shipment backlogs, and annoyed shippers and intermodal marketing companies (IMC). The situation grew acute enough for shippers to divert thousands of truckloads from the rails to the highways—a reversal of recent trends—at much higher shipping costs.

"The network is still not back to normal," said Tami Parsons, director of intermodal sales at CSX Transportation. Parsons told the conference that it would take at least two to four weeks for CSX to restore proper network fluidity levels. Parsons aid CSX is having trouble finding containers in the Midwest and Northeast. "Generally, when the network is working fine, [equipment] shortages aren't a problem," she said.

Kari A. Kirchhoefer, president of Streamline, a unit of Union Pacific Corp. that provides door-to-door intermodal services, said the unit's equipment was "out of balance" for part of the quarter, resulting in service issues and missed opportunities as so-called spot market customers had trouble finding capacity. Kirchhoefer noted the solid March results, but added that customers told her that "we could have given you much more." The problems at the end of 2013 and first two months of 2014 forced Streamline to table planned equipment purchases this year, she said; the unit plans to add assets in 2015, she said.

At a hearing yesterday in Washington, D.C., before the Surface Transportation Board (STB), the federal agency that oversees the railroads, industry executives said they were implementing plans to right their networks. According to John G. Larkin, analyst for investment firm Stifel, Nicolaus & Co. who attended the hearing, much of the effort hinges on clearing traffic in Chicago that was supposed to be switched from one railroad to another. "Now that the weather has improved, the backlog is in the process of being systematically cleared, which should restore Chicago to targeted fluidity levels within the next month or two," Larkin said in a research note today.

Big rail shippers said at the hearing that they continue to be affectd by the earlier service disruptions. According to Larkin, utilities in the upper Midwest and Texas reported that coal stockpiles have dwindled to less than a 100-day supply. If deliveries don't accelerate soon, some coal-fired plants may run short during the middle of summer, Larkin said.

In addition, representatives of grain shippers said they are running out of storage facilities to safely store last year's bumper crop. As a result, some are shifting to truck transport and are incurring much higher transportation expenses, Larkin said. Meanwhile, chemical shippers said railcar cycle times have slowed considerably, resulting in an effective reduction in hauling capacity.

While the carload side continues to struggle, intermodal executives said their sector is prepared to resume its upward trajectory as the underlying networks return to pre-winter conditions. "We still have record volume and record opportunity," said Sam Niness, assistant vice president-sales and marketing, Thoroughbred Direct Intermodal Services, a unit of Norfolk Southern Corp. that sells intermodal services through wholesalers. Niness said the unit plans to add, on a net basis, 1,000 containers in 2014.

A large chunk of intermodal's growth has come from convincing shippers, brokers, and truckers to divert freight from the highways and onto the rails. Rail intermodal touts itself as being more cost-effective, environmentally friendly, and fuel-efficient than over-the-road operations. It has benefitted from shipper and trucker concerns over driver shortages, a lack of truck equipment capacity, and road congestion.

Once used almost exclusively for distances of more than 1,000 miles, intermodal service is now viable at lengths-of-haul of 500 to 550 miles, intermodal executives said. They caution, however, that the cost of draying freight from the customer's dock to an intermodal ramp, and then performing the same service on the receiving end, could neutralize the benefits of intermodal over truck on shorter-distance moves.