AAR reports June 2011 carload and intermodal volumes are up year-over-year

Following flat traffic growth on an annual basis in May, the Association of American Railroads (AAR) reported that both carload and intermodal volumes in June were up compared to the same timeframe last year.

“For several months now, rail traffic, along with other economic indicators, have presented a mixed picture of the economy,” said AAR Senior Vice President John T. Gray in a statement. “While rail carloads have been relatively weak for the past quarter, largely due to coal traffic being down, rail intermodal remains relatively strong. Just like America waits to see what will happen with overall economic recovery, railroads are waiting to see what’s in store for the second half of the year.”

June carloads hit 1,428,580 for a 0.9 percent annual gain, and the weekly carload average in June was 285,716 and 0.5 percent better than May’s 289,932 weekly average. On a quarterly basis, the second quarter of 2011 at 3,765,278 was up 0.5 percent compared to the second quarter of 2010 and 14.3 percent better than the second quarter of 2009. And for the first half of 2011, total carloads were up 2.7 percent annually.

AAR officials said that the 0.5 percent sequential increase is the equivalent of two additional trains per day over a 140,000-mile network is not much of an increase and is a function of the slow growth the economy has been experiencing. This raised the question posed by the AAR as to if the weakness of the past two months going to linger or is it a product of temporary factors such as supply chain disruptions from Japan or higher gasoline prices that are now on the decline?

Intermodal had another solid month at 1,152,432 trailers and containers, making it 4.6 percent higher than June 2010. Even with the increase, AAR officials said this marks the lowest annual monthly gain since January 2010. June’s weekly intermodal average was 230,486 containers and trailers, below May’s weekly average of 233,239 and snapping a five-month streak of sequential weekly average increases.

Even with the modest decline in intermodal, domestic intermodal product led by container growth is a growth story being driven by shipper demand amidst capacity concerns, said Tony Hatch, principal of New York-based ABH Consulting, in a recent interview.

Other factors driving intermodal growth cited by Hatch include driver shortages, regulatory issues, and oil prices and carbon are more entrenched a year later, adding that “it is an exciting product and it is going to grow10 percent or so and as we get to Peak Season we will see that capacity used up and even potentially face shortage issues again. It is healthy growth for an economy growing at a fraction of that.”

Other reasons intermodal is continuing its strong run, according to industry experts, include supply capacity, which remains tight in the trucking market and lowering supply chain expenses at a time when fuel costs remain high, among others.

Of the 20 major commodities tracked by the AAR, 14 were up year-over-year in June. Metallic ores were up 19.2 percent, lumber & wood was up 12.9 percent, and grain was up 11.3 percent.  Coal was down 3.2 percent, waste and non-ferrous scrap was down 13.6 percent.

Railroad employee numbers increased by 745 to 157,522 employees in May from April (the most recent month for which data is available).

And as of July 1, the AAR said that 276,236 freight cars—or 18.2 percent of the total fleet—were in storage, a decrease of 2,847 cars from June 1.