AAR reports annual increases in February 2011 volumes

Despite harsh weather conditions throughout many parts of the country, rail volumes in February were up in February on a year-over-basis, according to data from the Association of American Railroads (AAR).

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Despite harsh weather conditions throughout many parts of the country, rail volumes in February were up in February on a year-over-basis, according to data from the Association of American Railroads (AAR).

Rail carloads for February—at 1,135,396—were up 4.2 percent annually and the weekly carload average in January was 283,349, which was 4.2 percent ahead of February 2010 and 2.7 percent ahead of February 2009. The annual gain in carloads represents the smallest annual gain for any month since July 2010, with the AAR attributing that to weather. Carloads have seen annual increases for 12 straight months, and on a seasonally-adjusted basis, carloads were down 3 percent compared to January.

Intermodal volumes in February hit 881,830 trailers and containers for a 10.3 percent increase over February 2010. The weekly intermodal average for February was 220,458 for a 7.1 percent annual gain and up 10.1 percent over January 2009. February’s volumes were up 21.4 percent compared to February 2009. Intermodal volumes have been up annually for 15 straight months. On a seasonally-adjusted basis, intermodal volumes were also up 0.1 percent.

”Intermodal is clearly hot, and domestic intermodal is white hot,” wrote Anthony B. Hatch, principal of ABH Consulting in a research note. ”And domestic intermodal conversion can solve three existing and/or emerging problems for shippers:  supplying capacity in an era of truckload shortage; lowering overall supply chain costs (among other reasons is its significant fuel and labor cost advantages); and lowering carbon footprints in an era when that topic has moved from cocktail chatter to a real decision point.  Improved rail service, better information technology and huge (recent and planned) capital expenditures on the network have all helped.”

Even though both carload and intermodal volumes were both up 0.1 percent from January to February on a seasonally-adjusted basis, the AAR said that in seasonally-adjusted terms, the recovery in U.S. rail intermodal traffic has been much stronger than the recovery in U.S. carload traffic.

And the AAR has noted in the past that domestic intermodal traffic in particular continues to see strong growth due to conversions of over-the-road domestic traffic to rail and growth in international trade. The AAR also said it reflects a years-long trend of domestic freight converting from truck trailers to containers on rail; truck containers can be double-stacked, which makes them more cost-efficient and effective. It also noted that growth in intermodal traffic is a function of both a growing economy and growing international trade.

“Rail traffic can be negatively affected by winter storms, and we got some of that in February,” said AAR Senior Vice President John Gray in a statement. “That said, U.S. rail carloads have now increased for 12 straight months and intermodal loadings for 15 straight months.  Rising consumer confidence, an improving employment picture, and higher manufacturing output are just some of the indicators that, along with rising rail volumes, point to an economy that seems poised to continue to grow in the months ahead.”

While railroad activity is clearly picking up, it is still lagging 2008 and earlier years on an absolute volume basis. And based on various economic indicators it is clear it will be a while more until rail volumes return to the same levels as previous years. Industry experts have told LM that rail traffic is in fact stronger than the macroeconomic, business, and general news headlines would suggest.

Of the 19 major commodities tracked by the AAR, 15 were up on an annual basis in February. Metallic ores were up 71.9 percent. Non-metallic minerals were up 12.7 percent, and motor vehicles and parts were up 11.2 percent.

Railroad employee numbers fell by 1,096 to 153,304 employees in January from December (the most recent month for which data is available). And total employment in January 2011 was 6,414 higher than January 2010 for a 4.4 percent gain, said the AAR.

And as of March 1, the AAR said that 303,316 freight cars—or 20.2 percent of the total fleet—were in storage, a decrease of 12,457 cars from February 1.

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About the Author

Jeff Berman, Group News Editor
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman

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