March 2014 carload and intermodal volumes post annual gains, reports AAR

March carload and intermodal volumes both saw annual gains, according to data released by the Association of American Railroads (AAR) this week.

Carloads for the month—at 1,156,697—were up 3.5 percent, or 36,628 carloads, compared to March 2013.

Intermodal—at 1,025,907 containers and trailers—were up 9.9 percent, or 92,661 units, annually and showed consecutive annual monthly increases for the 52nd consecutive month. And the weekly average for intermodal in March at 256,477 now stands as the highest weekly average for the month of March ever recorded and is the fourth highest volume month in history. 

Of the 20 commodities tracked by the AAR, 11 were up annually in March. Grain was up 14,272 carloads (21.2 percent), and coal was up 9,649 carloads (2.2 percent). Iron and steel scrap was down 2,602 carloads (13.7 percent), and metallic ores were off 1,345 carloads (7.1 percent).  The AAR said that excluding coal and grain, carloads were up 14,707 carloads, or 2.9 percent, in March annually.

“U.S. rail traffic rebounded strongly in March 2014 following a sub-par February.  Grain led the way, as railroads are working hard to move the biggest grain harvest in history,” said AAR Senior Vice President John T. Gray in a statement. “In addition, coal carloads rose in March, something that’s happened just one other time in the past two years.  March also demonstrated that we have every reason to be optimistic that 2014 will break 2013’s intermodal volume record.”

Robert W. Baird and Co. analyst Ben Hartford wrote in a research note that solid intermodal growth could indicate pent-up demand, unwinding backlogs.

“Solid intermodal growth could indicate that backlogs that developed as a result of the severe winter weather are unwinding and networks are becoming more fluid, which would be consistent with our channel checks,” wrote Hartford. “While we heard some anecdotes of intermodal volumes that shifted to truck, the solid growth in March could also be indicative of pent-up intermodal demand.”

FTR Senior Consultant Larry Gross told LM that carload performance in March was pretty decent, with some of the growth coming from a catch-up of the harsh winter weather.

As for the impressive intermodal gains in March, Gross said that is due in part to the timing of the Lunar New Year, which came relatively early at the end of January with factories in China shut down for three weeks, one week before the holiday and two weeks after.

“It takes a while for the effect of that to reach our shores, because of the timeline involved in transit,” he said. “There typically is an effect overall for a period of 7 or 8 weeks after the Lunar New Year, with the week after being the highest week because you seeing the stuff moving that was shipped just prior to when everything gets shut down in China, but it takes at least 3 weeks to get here and impacts annual comparisons for that timeframe.”

For the week ending March 29, U.S. railroads originated 301,317 carloads for a 7.2 percent annual gain, and intermodal was up 13.5 percent at 265,188.

On a year-to-date basis for the first 13 weeks of 2014, U.S. carloads at 3,602,739 are up 0.9 percent compared to the corresponding period a year ago, and intermodal is up 3.8 percent at 3,202,999 containers and trailers.