August carload and intermodal volumes are strong, reports AAR

The Association of American Railroads (AAR) reported today that both carload and intermodal volumes saw annual gains in August.

United States Class I carloads were up 33,838 carloads–or 2.9 percent annually–at 1,212,287 in August, and total carloads per week averaged 303,072 for the month, which represents the highest weekly average for any month since October 2011 and the highest August tally going back to 2008, the AAR said.

Intermodal was also solid in August at 1,075,688 containers and trailers, which represented a 4.3 percent-or increase of 44,520 intermodal units, over August 2013. And the August weekly intermodal average-at 268,922-represents the second highest weekly average ever for a single month, with June 2014 the best month on record. 

Of the 15 commodity categories tracked by the AAR, 15 saw annual gains in August, with petroleum and petroleum products up 25.2 percent, crushed stone, sand and gravel up 14.4 percent, and grain up 16 percent for its tenth straight double-digit annual increase. Coal was down 4.2 percent. And the AAR also pointed out that crude oil-by-rail volumes continues to see significant volume gains, with U.S. Class I railroads originating 119,634 carloads of crude oil for the entire second quarter, which outpaced the first quarter by 8.6 percent and is the highest volume for crude oil-by-rail loadings for any quarter, with this category accounting for 1.6 percent of total U.S. Class I carloads.

“The rail industry has played and is continuing to play a critical role in the U.S. economy’s resurgence,” said AAR Senior Vice President John T. Gray in a statement. “In fact, average weekly U.S. rail volume, in terms of carloads plus intermodal containers and trailers, was higher in August 2014 than in any month since October 2007. The broad range of commodities that are seeing higher rail volumes is a welcome sign for the economy.”

While rail and intermodal volumes are strong, the sector is still dealing with service-related issues stemming from the first quarter’s harsh winter weather.

As previously reported by LM, when publicly-traded Class I freight railroad and intermodal service providers issued second quarter earnings results earlier this summer, the topic of less than ideal service on the rails was a common theme within the earnings releases and question and answer sessions with top management at those companies.

This year has been quite different than other in that all carriers and intermodal service providers have dealt with the same service issues to a certain extent. But the good news is that things are much improved since the end of the first quarter, according to Brooks Bentz, a partner in Accenture’s supply chain practice.

“Typically when clients tell us that they are dealing with capacity issues on the truckload side, we tell them to switch to intermodal as it has functionally unlimited capacity,” he said. “But at that time they could not make the switch to intermodal because of the problems in Chicago, drayage and network fluidity and while there was not sufficient network capacity at that time, now it has largely gone away.”

For the week ending August 30, the AAR reported that U.S. carloads were up 1.3 percent annually at 305,571, and intermodal was up 5.3 percent at 273,458 units. And through the first 35 weeks of the year, carloads were up 3.6 percent at 10,132,392, and intermodal was up 5.7 percent at 9,004,288 units.