AAR says railroad freight traffic is down for March and first quarter

By Jeff Berman, Senior Editor -- Logistics Management, 4/5/2007

WASHINGTON—Capping off a month which had its fair share of inclement weather and erratic economic activity, carload freight and intermodal volumes on United States railroads were down in March compared to last year, according to data released today by the Association of American Railroads (AAR).

The AAR said that U.S. railroads originated 1,310,037 carloads of freight in March, which was down 3.4 percent—or 45,891 carloads—from March 2006. Intermodal volume at 908,109 units in March saw a 1.4 percent decline—or 12,914 trailers and containers—compared to March 2006.

And for the first quarter of 2007, the AAR said that U.S. rail carloadings were down 4.9 percent—or 211,519 carloads—to 4,125,876 carloads, and intermodal volume was off 0.2 percent—or 4,608 units—to 2,939,039 trailers and containers. Total volume for the quarter was estimated at 419.2 billion ton-miles by the AAR, which was down 3.6 percent from the first quarter of 2006.

While both monthly and quarterly totals were down from the same timeframe a year ago, there are some anecdotal reasons for this, AAR director of editorial services Tom White told Logistics Management.

“Data in the first part of the year is notorious for being subject to weather problems,” said White. “And that is one of the reasons it makes it a little bit more difficult to draw a lot of conclusions early in the year.”

White cited the week ending March 31 as an example of this, with two feet of snow falling in the southern part of the Powder River Basin, which drove down coal loadings 15.9 percent for the month. This snowfall, said White, drove down coal “a huge amount” for the year-to-date, whereas before coal loadings were even or a little ahead for the year, he said.

Aside from weather problems, White said that the housing industry and automotive traffic remain very weak, with motor vehicles and equipment down 7.7 percent in March and 13.7 percent for the quarter. On the bright side, chemicals were up 5.8 percent for the month and 2.1 percent for the quarter.

Going forward, White said he is hopeful that railroad volumes will inch up as the weather gets warmer and the economy improves.

“There are some signs that the housing market may be improving at some point soon, but at this point we are still dealing with a lot of declines in a lot of areas,” said White. “I don’t know if we can say it is all weather-related ..I suspect it is only partly weather related.”

Another reason for optimism according to White is the fact that the class I railroads are still investing for growth, with all of them making some sort of inroads in terms of making significant investments to expand infrastructure and add capacity.

“Long-term growth is going to happen and we have to be prepared to handle it, and we know we have to continue to expand capacity which is what the railroads are preparing for even through traffic is down right now,” said White.