(The following story by John D. Boyd appeared on The Journal of Commerce website on August 26, 2010.)
WASHINGTON, D.C. — North American short line and regional railroads are reporting freight traffic gains on the rise since mid-summer, a contrast to the wave of weak economic reports on housing and other activity for July.
The RMI RailConnect report, taken from carload volume reports by more than 340 small U.S. and Canadian carriers, had short lines originating 98,885 loads in the week ending Aug. 14, the highest level since the April 24 peak so far this year.
The latest RMI volume was also the fifth straight weekly increase since the week ending July 10, a mildly shortened work period that began with the July 4 holiday.
“There has been gradual and steady improvement since that week,” said Paul Pascutti, RMI’s vice president for international sales.
Rail freight traffic is considered a reliable indicator of real-time economic activity, but it often leads general perceptions. For instance, rail volumes of many basic materials used or produced by factories fell all through May and June, although financial markets and delayed economic reports did not pick up the slowdown at first.
Now, major economic indicators still reflect weakness from the April-June quarter and which continued for July. However, the rail data kept falling through early July but has been growing since.
In tracking the short line freight patterns, “we saw a decline in traffic during June, culminating with a low point the week of July 4th (week ending July 10th),” Pascutti said. “We actually feel like rail freight traffic is slowly but steadily improving since June.”
Short line loadings are dominated by the cargoes that reflect basic commodity demand and manufacturing trends.
Intermodal containers or trailers do not make up nearly as high a portion for short lines as for major railroads; however, small carriers have also seen their intermodal volume pick up in recent months as that sector continues to see strong momentum from rebounding imports and a domestic modal shift away from all-truck shipments.
Chemicals are the single largest cargo category for small railroads, and such loadings often reflect ongoing factory demand for a wide range of raw materials as well as chemicals used to make packaging materials for other goods. Their latest week’s 15,595 chemical tank car loads is in the upper range of top volumes this year.
Coal and grain shipments have also strengthened some in recent weeks, with each reflecting specific market inventory issues. Recent automobile and parts traffic has strengthened, along with the basic stone, clay and aggregate materials used in construction projects.