AAR says July volumes show some improvement

As in previous months in 2010, July rail carload totals were somewhat uneven, according to data published by the Association of American Railroads (AAR).

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As in previous months in 2010, July rail carload totals were somewhat uneven, according to data published by the Association of American Railroads (AAR).

The AAR reported that monthly rail carloads for July—at 1,112,308—were up 4.1 percent year-over-year and down 14.6 percent from 2008. July carloads were up 3.2 percent compared to June. U.S. carloads averaged 280,577 carloads per week in July, down from 283,126 in June and 288,419 in May and 294,758 in April.

Intermodal traffic in July—at 883,593 containers and trailers—was up 17.3 percent year-over-year and down 5.1 percent compared to 2008. The AAR said the weekly average of 220,998 trailers and containers was up slightly from June’s 220,267, marking the highest weekly average since October 2008 and a 17.3 percent gain compared to July 2009.
The AAR said that U.S. intermodal volumes—for their average unadjusted weekly trailer and container traffic—have gone up for five straight months, due in large part to conversions of over-the-road domestic traffic to rail and to growth in international trade. This is indicative, said the AAR, of a years-long trend of domestic freight converting from truck trailers to containers on rail; truck trailers can be double-stacked, which makes them more cost-efficient and effective.

In October 2009, the AAR began reporting weekly rail traffic with year-over-year comparisons for the previous two years, due to the fact that the economic downturn was in full effect at this time a year ago, and global trade was bottoming and economic activity was below current levels.

As LM has reported, while railroad activity is clearly picking up compared to a dismal 2009, 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.

And while carloads have seen some sequential declines in recent months, AAR officials cautioned that this does not indicate it is the beginning of a steep volume decline either. They added that an economy several months into a recovery from the worst recession in decades should be yielding rail traffic levels heading north, not south.

As an example, AAR officials pointed out that July’s increase in seasonally-adjusted carloads is a continuation of an upward trend—replete with some “zigs and zags”—that began about a year ago. They noted that in the 14 months since May 2009 seasonally-adjusted rail carloads have gone up on a sequential basis in eight of those months and are down in six, with the average percentage increase for months that saw gains at 3.3 percent, which is more than double the average decrease of -1.4 percent for the six months that saw carload reductions.

“We typically see a lull in some categories of traffic this time of year, so looking at seasonally adjusted data may be more helpful in gauging rail traffic this month,” said AAR Senior Vice President John Gray, in a statement. “Coal and autos are the two commodities most often affected by seasonal issues in July, and both saw seasonally adjusted traffic gains last month.”

Of the 18 major commodities tracked by the AAR, 15 saw carload gains on an annual basis. Coal continued a modest recovery and was basically flat in July with a 0.4 percent decline. Motor vehicles and parts were up 15.7 percent. Food products were down 4.2 percent.

As has been the case for several months, overall economic activity is likely to remain bumpy over the next several months, due largely to a shaky unemployment outlook and sluggish consumer spending. With unemployment at 9.5 percent in June and July, railroad employee numbers grew to 151,527 employees in June 2010 (the most recent month for which data is available) from 149,967 in May 2010. And following a relatively low 747 cars being brought back in service in May, the AAR said 3,064 rail cars were brought back into service in June, followed by 5,808 cars brought back in July. This leaves available railcar capacity at about 23.4 percent, said the AAR.

“The pessimism we hear about the durability of the recovery does not apply to the rails,” said Anthony B. Hatch, principal of ABH Consulting. “And, with rail traffic a coincident indicator, perhaps we should take more heart about the economy.  Rail traffic has remained shockingly strong, well after the May ’09 trough comparisons.”


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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Not Your Grandfather's Intermodal
Transportation of freight in containers was first recorded around 1780 to move coal along England’s Bridgewater Canal. However, "modern" intermodal rail service by a major U.S. railroad only dates back to 1936. Malcom McLean’s Sea-Land Service significantly advanced intermodalism, showing how freight could be loaded into a “container” and moved by two or more modes economically and conveniently. As with all new technologies, there were problems that slowed the growth, which influenced many potential customers to shy away from moving intermodal.
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