The logistics world is in the middle of ongoing transformation, but one trend positioned to continue its hot streak in 2016 is intermodal transportation. Traditional truck shipping, though still crucial for last-mile delivery, simply doesn't accommodate or align with modern supply chain challenges, including growing highway congestion, the ongoing truck driver shortage and organizations' elevated focus on sustainability.

Recognizing this fact, businesses have leapt at the opportunity to take advantage of both intermodal shipping and intermodal-adjacent real estate. In 2015, the U.S. moved more than 300,000 containers per week, on average, across domestic and international activity. Chicago, home to a number of railroad-operated intermodal yards and industrial parks, moved 7.5 million containers in 2014 alone, up 27 percent from 2009. This phenomenon is far from unique to the Midwest. Between 60 and 70 percent of imports that arrive at the Port of Tacoma move directly onto rail, providing rapid market access across the country.

As trucking infrastructure decays and public and private organizations continue to invest in intermodal facilities, rail is quickly becoming the preferred means of transport for both commercial and industrial goods. To date, intermodal has played an essential role in allowing cargo owners to move products through their supply chains more efficiently, reliably and at a lesser cost to the environment. While these foundational benefits are unlikely to change through 2016 and beyond, other facets of intermodal shipping will evolve.
The logistics, transportation and real estate communities will have to grapple with a handful of intermodal-related changes in the coming months, from new retail distribution models and emerging storage needs, to the diversification of intermodal users.

• Rise of Hub-and-Spoke Models: As online and brick-and-mortar retailers recognize the inherent advantages of intermodal transport, they're beginning to converge around a common distribution model. Driven in part by the e-commerce boom (and consumers' growing expectations for same and next day delivery), businesses today face pressure to reach population segments across the country while keeping expenses down. To accomplish both goals, cargo owners are strategically developing regional distribution centers near intermodal hubs along with smaller "spokes" to serve individual markets.

Retailers have long coveted access to central business districts, but the difficulty of constructing effective distribution facilities in or near them has kept many at bay. However, the abundance of available infill space (too cramped for trucking-dependent transportation) can serve as excellent satellite warehouses for intermodal-connected distribution centers. Going forward, we're likely to see tenant demand shift away from sprawling, million square-foot facilities hours outside of major cities in favor of smaller spokes with immediate urban access. As vacancy rates start to plummet in certain markets, there could be a rush of businesses scrambling to acquire remaining functional spaces, and adapt them for their own logistics needs.

• Demand for Storage: As intermodal adoption matures, businesses are also realizing the need for additional storage space near major markets and intermodal hubs themselves. Ocean carriers and other shipping companies have been historically lax about offering free storage time to customers. Now, as port congestion continues to plague various parts of the country, carriers are under pressure to curb these perks.With the cost of keeping shipping containers and rail cars on-site at intermodal facilities poised to grow, organizations may be forced to turn over goods more quickly. In 2016, more cargo owners will be on prowl for additional, potentially built-to-suit, storage centers. Unsurprisingly, properties adjacent to or integrated within existing intermodal yards may be in especially high demand. In the last year and a half, we've already seen major logistics providers including Quala and California Multimodal develop their own storage facilities at intermodal centers in Savannah and Joliet, respectively.

• Industry Diversification: Intermodal has long been a staple for industries like retail and international manufacturing, but the year ahead could bring an influx of new sectors into the fold.Supply chain flexibility is becoming a top priority for leading export industries such as the plastics, agriculture and machinery sectors. U.S. machinery exports totaled more than half a trillion dollars last year alone, while plastics and agricultural products remain internationally competitive. The tight rail, inland and coastal port integration intermodal offers is an invaluable benefit for businesses that need to ship bulk and perishable cargo fast. Keep in mind, however, that tenants in these niche sectors are likely to bring a new set of facility needs when developing and leasing intermodal-proximate industrial space.

As more businesses and industries embrace intermodal, new paradigms and pain points will inevitably emerge. Unchained from traditional supply chain constraints and expenses, businesses have room to experiment with alternative distribution models and nontraditional industrial locations. Cargo owners will continue to tinker with their intermodal efforts over the next year, focusing specifically on improving flexibility, mitigating costs and providing superior customer service. For real estate developers and investors capable of accommodating this evolving demand, 2016 could be full of untapped opportunities.