May carload and intermodal volumes are mixed compared to 2014, reports AAR

In what has tuned into more than a common theme, carload volumes in May were down annually, while intermodal volumes were up, according to data issued this week by the Association of American Railroads (AAR).

May carloads-at 1,074,285-were down 9.4 percent–or 111,539 carloads–annually. Five of the 15 commodities tracked by the AAR were up annually in May, with motor vehicles and parts up 4.5 percent or 3,207 carloads, and waste and nonferrous scrap up 3.8 percent or 519 carloads. Coal continued its steady decline, down 17.4 percent–or 77,992 carloads.  On a year-to-date basis through May, U.S. carloads are down 3 percent–or 179,906 carloads–at 5,884,411.

And intermodal volume for the month–at 1,085,968 trailers and containers–saw a 3.8 percent–or 40,057 units–annual gain. Intermodal volume is up 2 percent–or 109,645 units–at 5,487,880 units-through the first five months of 2015.

While intermodal again outpaced rail carloads for the month, one notable difference cited by AAR officials was that May marks the first time that monthly intermodal volumes topped carload volumes. And it added that total U.S. carload and intermodal volumes–at 2,160,253–were 3.2 percent–or 71,482 carloads–below May 2014.

“Mixed signals is a good term to use to describe the economy nowadays, and it applies to rail traffic too. Intermodal is on its way to another record-breaking year, but carload traffic is not doing well,” said AAR Senior Vice President Policy and Economics John T. Gray in a statement. “The degree to which coal carloads have fallen has been a surprise, and the relative weakness in other carload categories is a sign that the economy is probably not yet in bounce-back mode after a dismal first quarter.”

In regards to carloads, Bill Renncke, director of Oliver Wyman, a Boston-based management consultancy, explained that because of a competition for resources, Class I railroads often do not focus on the carload business with the same vigor they place on intermodal and unit train traffic, so carload subsequently is not growing as fast as it could.

“Carload is one of the two untapped growth opportunities for the rail industry,” he said. “The other being domestic intermodal particularly in markets that require two carrier hauls like Mexico, the Gulf, and the Midwest to the East Coast.”

As previously reported, on the intermodal side, the improvement in intermodal service has been intact over the last several months, with another harsh winter in the past, coupled with subsequent gains in network velocity. What’s more, intermodal is also seeing benefits of slowly-improving throughput for cargo coming out of West Coast ports, which was largely stalled through the end of February for about nine months leading up to that, due to the West Coast port labor disruption. And an improving economy and the ongoing driver shortage situation, which has resulted in tight capacity (which has loosened up in recent months) environment that also favors intermodal conversion by shippers, too.

For the week ending May 30, the AAR reported that carloads were down 10.7 percent annually at 258,373, and intermodal was up 2.1 percent at 247,170.