(Jeff Berman, Group News Editor — Logistics Management, 8/27/2009)
Despite decline, volume declines are less than previous weeks
WASHINGTON—While rail volumes remain down compared to a year ago, there is evidence that conditions are improving somewhat, according to data from the Association of American Railroads (AAR).
For the week ending August 22, carload freight, which does not include intermodal data, totaled 279,478 cars, a 16.1 percent annual decline. Despite the decline, this is the highest weekly carload freight total since the week ending March 14, which hit 279,287 cars, and it is better than the cumulative 17.2 percent decline from the previous four weeks.
The AAR said that carloadings were down 14.2 percent in the west and 18.9 percent in the east. Weekly carload was higher on a sequential basis, too, topping 276,488 carloads for the week ending August 15.
Weekly intermodal volume at 193,207 trailers and containers was off 16.2 percent year-over-year, with container volume and trailer volume down 10.2 percent and 38.2 percent, respectively. Intermodal volumes have held steady in recent weeks between roughly 189,000 and 195,000 units since the week ending July 18.
And weekly railroad volume was estimated at 29.8 billion ton-miles, which is ahead of last week’s 29.8 billion and 29.3 billion from the previous three weeks, and down 15.6 percent from last year.
While weekly carload volumes have been in the 250,000-270,000 range for a majority of the year, they have bettered 270,000 for the last five weeks. Despite this uptick, they are still below average compared to previous years which have seen record-breaking volumes.
Of the 19 commodities tracked by the AAR, 18 were down year-over-year, with nonmetallic minerals up 1.3 percent. Motor vehicles and equipment and grain were down 22.0 percent and 14.8 percent, respectively.
While rail carloads for the 19 commodity groups tracked by the AAR are down 16.1 percent for the week ending August 22, they are down 18.8 percent for the first 33 weeks of 2009, with trailers and containers down 17.1 percent. Many industry experts place more value on the latter as it is more reflective of actual volume moving during a particular period, compared to specific commodities which can have fluctuating volumes depending on time of the year and demand levels.
“Volume declines for the U.S. carriers were less severe in week 33 than the 3Q09 QTD volume declines,” said Stifel Nicolaus analyst John Larkin in a research note. “We attribute that trend to some sequential improvement in automotive/industrial carloads without any improvement seen in intermodal volume.”
Prior to the recession, a railroad industry analyst told LM that what happens with railroads in terms of volume and pricing is not a barometer of the general economy, considering that railroads typically barely earn above their cost of capital and pay for their own infrastructure improvements.