Intermodal leads the way on the rails for the week ending August 14, says AAR

Volumes on United States railways were up year-over-year for the week ending August 14, with intermodal hitting its highest levels of the year, according to data from the Association of American Railroads (AAR).

Weekly carload volumes—at 295,948—were up 7.1 percent year-over-year and down 11.3 percent compared to 2008. It topped the week ending August 7, which hit 284,507, and fell short of the week ending July 31, which hit 300,292 carloads, which is the best weekly carload output for all of 2010.

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.

Carload volume in the East was up 6.4 percent year-over-year and down 12.8 percent compared to 2008. And out West carloads were up 7.6 percent year-over-year and down 10.2 percent compared to 2008.

Intermodal traffic—at 233,767 trailers and containers—was up 20.8 percent year-over-year and up down 1.4 percent compared to 2008. This eclipsed the week ending August 7 at 231,208, and the week ending July 31 at 232,985 trailers and containers, which previously marked the highest intermodal levels in 2010, beating the week ending July 3, which hit 231,286. The week ending July 3 was the highest intermodal output since week 42 of 2008. Intermodal container volume—at 199,859— was up 22.4 percent compared to 2009 and up 6.4 percent compared to 2008. AAR officials said this is the highest weekly intermodal container tally on record. And trailer volume—at 33,908— was up 12.3 percent and down 31 percent compared to 2008.

As LM has reported, domestic intermodal performance continues to be strong, due, in part, to a tightening of truckload capacity, which has some shippers converting to intermodal. 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.

Stifel Nicolaus analyst John Larkin wrote in a research note that the growth in intermodal loads should grow at a faster rate than loads hauled over the highway
as fuel prices likely increase, highways become increasingly congested, the North American rails make further investments to intermodal corridors and terminals,  and federal and local governments provide a portion of the funding for certain intermodal infrastructure projects, among other factors.

And rail industry stakeholders remain optimistic about railroad growth throughout the remainder of 2010. Among the things they have pointed to include increased industrial production growth in the form of manufacturing and new orders indices, as well as gradual consumer spending, among other factors, as drivers for these gains. But even though volumes are slowly recovering, they are still below previous peak levels.

While volumes remain below these previous peak levels, they are starting to face tougher year-over-year comparisons through the remainder of 2010, given the fact that 2009 was a down year for the rails in terms of volume growth.

On a year-to-date basis, total U.S. carload volumes at 9,041,726 carloads are up 7.2 percent year-over-year and down 13.1 percent compared to 2008. Trailers or containers at 6,783,820 are up 13.9 percent year-over-year and down 5.7 percent compared to 2008.

Of the 19 carload commodities tracked by the AAR, 16 were up year-over-year. Metallic ores were up 65.4 percent and metals & products were up 38.8 percent. Grain loadings were down 8.8 percent.

Weekly rail volume was estimated at 32.5 billion ton-miles, an 8.7 percent year-over-year increase. And total volume year-to-date at 994.9 billion ton-miles was up 8.3 percent year-over-year.