Railroad shipping: AAR June volumes are a mixed bag

As in previous months in 2010, June rail carload totals were a mixed bag, according to data published by the Association of American Railroads (AAR).

The AAR reported that monthly rail carloads for June—at 1,415,630—were up 10.6 percent year and down 10.2 percent from 2008. June carloads were down 1.3 percent compared to May, which was down 1.1 percent compared to April. U.S. carloads averaged 283,126 carloads per week in June, down from 288,419 in May and 294,758 in April.

Intermodal traffic in June—at 1,101,333 containers and trailers—was up 19.2 percent from June 2009 and down 1.4 percent from June 2008. And the AAR said the weekly average of 220,267 trailers and containers was its highest since October 2008, topping the previous high compared to October 2008 from May, which hit 216,879 trailers and containers.

The AAR said that average weekly container volume in June was the ninth highest since 1980. 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.

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 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. June rail traffic, according to the AAR, is consistent with an economy that is in far better shape that it was nine-to-12 months ago.

“While June traffic shows signs of an economy that is in better shape than it was a year ago, we still have a long way to go to see rail traffic levels associated with a full recovery,” said AAR Senior Vice President John Gray, in a statement. “For example, both the Purchasing Managers Index and consumer confidence fell in June.”

Overall economic activity is likely to remain bumpy over the next several months, due largely to a shaky unemployment outlook and sluggish consumer spending. The AAR’s monthly Rail Time Indicators report noted that while the U.S. unemployment rate dipped from 9.7 percent in May to 9.5 percent in June, railroad employee numbers grew to 149,967 employees in May 2010 from 149,749 in April 2010, the most recent month for which data is available. 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.

Of the 18 major commodities tracked by the AAR, 16 saw carload gains on an annual basis. Coal continued a modest recovery with a 2.1 percent gain. Grain was up 11.9 percent, and motor vehicles and parts were up 50.9 percent. Grain mill products were down 7.1 percent, and farm products excluding grain were down 2.9 percent.