AAR reports mixed volumes for June 2015

The Association of American Railroads (AAR) reported today that United States carload and intermodal volumes remained on their ongoing paths for the month of June.

Carloads were down 7.7 percent annually–or 91,016 carloads–at 1,087,066. And sox of the 20 carload commodity categories tracked by the AAR saw annual gains in June, with motor vehicles and parts up 4.7 percent or 3,379 carloads, and grain up 3 percent or 2,208 carloads. Coal loadings continued their slide, down 17.4 percent, or 76,752 carloads, and primary metal products were off 13.9 percent or 6,160 carloads. On a year-to-date basis through June, the AAR reported that carloads are down 3.8 percent, or 271,831 carloads, at 6,930,568.

Still sluggish carload volumes stem from various factors, with Stifel Nicolaus analyst John Larkin pointing to “changes in traffic mix and geographic concentration of the traffic that have created challenges with respect to the railroads’ collective ability to provide high levels service, and the industry’s efforts to make the investments and operational changes necessary to bring service levels up,” adding that railroad service should rebound to normal by some time in late 2015.

While carload volumes continued to lag, intermodal continued to shine. AAR reported that June intermodal volume–at 1,117,149 containers and trailers–was up 3.7 percent, or 39,797 units, annually, which now stands as the highest-volume rail intermodal month ever recorded, according to AAR data.

In LM’s recent rail and intermodal roundtable, Bill Rennicke, a partner at Oliver Wyman, noted that he expects continuing intermodal growth by a percent or two above GDP for intermodal during the year. Rennicke also noted that domestic traffic should grow faster than GDP driven in part by a truck driver shortage, while international growth will be a bit below GDP, but possibly accelerating toward the end of the year as the strong dollar drives up consumer imports. He also sad it’s clear that intermodal will hit record volumes again this year.”

AAR Senior Vice President Policy and Economics John T. Gray agreed with Rennicke in regards to intermodal’s projected growth path for 2015.

“Recent declines in rail carload traffic, especially coal, shouldn’t detract from the tremendous improvements we’ve been seeing in intermodal,” said Gray in a statement. “The growth in rail intermodal is one of America’s best transportation-related success stories. June 2015 was the highest-volume rail intermodal month in history for U.S. railroads, and 2015 will almost certainly set another annual record, breaking the record set last year.”

For the week ending, June 27 carloads were down 8.9 percent annually at 547,969, and intermodal was up 4.1 percent at 275,564 containers and trailers.