AAR reports mixed carload and intermodal volumes for month of January

United States railroad and intermodal volumes remained in familiar territory to begin 2016, according to data issued by the Association of American Railroads (AAR).

January carloads dropped 16.6 percent, or 192,747 annually, to 968,042. Only four of the 20 carload commodities the AAR tracks saw annual gains, with miscellaneous carloads up 45.2 percent, or 7,409 carloads, and chemicals up 2.1 percent, or 2,615 carloads. Coal continued its steep volume declines, down 33.3 percent, or 150,658 carloads, with the AAR observing that minus coal loadings the annual volume decliner for carloads is less severe, with carloads down 5.9 percent or 42,089, annually.

Intermodal volume was up 3.4 percent, or 34,523 units, annually at 1,039,621 containers and trailers.

AAR Senior Vice President of Policy and Economics John Gray was direct in addressing the current state of carload and intermodal volumes.

“Intermodal was solid in January, but carload volumes weren’t what railroads were hoping for,” said Gray in a statement. “By all accounts, rail service right now is excellent, but volume just isn’t there.  At some point, the problems currently plaguing the energy and manufacturing sectors - low oil prices, a strong dollar, uncertainties in emerging markets - will sort themselves out.  When that happens, railroads will be positioned to provide safe, reliable service.”

The ongoing intermodal growth continues to highlight recurring themes cited by the AAR and industry stakeholders that note intermodal’s cost-effectiveness in moving rail intermodal shipments, especially in comparison to trailers, as containers can be double-stacked and are easier to load onto and take off a railroad flat car than trailers.

Larry Gross, senior consultant at freight transportation consultancy FTR, said in a recent interview that prospects for international intermodal into the U.S. figure to be promising with unemployment relatively low, growth in the consumer economy, and consumers having more disposable due to lower gas prices.

“The fundamentals are in place, at least on the consumer side, to support import growth,” he said. “But the domestic intermodal piece has more going on with growth slowing mostly because of the combined effect of truck capacity lower fuel prices and the hangover from service issues that now have been largely resolved.”

Gross said carloads are seeing a mix of cyclical and secular things, with the ongoing large declines in coal and the overall energy sector driving the annual declines.

“These volumes, specifically coal, are not coming back,” explained Gross. “That presents the question of whether coal volumes will stabilize or continue to head down. Along with coal, crude by rail shipments and frac sand and metals are all down, which is a secular item. What this is saying is that the U.S. industrial economy is flat on its back right now, which leaves the railroads in a difficult position.”

For the week ending January 30, U.S. carloads were down 16.6 percent annually at 248,961 carloads, and intermodal was up 5.5 percent at 263,785 trailers and containers.