Railroad shipping: AAR reports September volumes are up from 2009, down from 2008

As was the case in August, September rail volumes were mixed when compared to the last two years, according to data released by the Association of American Railroads (AAR).

The AAR reported that monthly rail carloads for September—at 1,487,511—were up 7.7. percent from September 2009 and down 7.5 percent from September 2008. The weekly September average of 297,502 carloads hit its highest level since October 2008, said the AAR. September carloads were 1.9 percent higher than September 2009.

While carload performance in September was steady, intermodal traffic was booming—at 1,165,288 trailers and containers—a 17.3 percent annual gain and up 0.2 percent from September 2008. The AAR said the weekly average of 233,058 trailers and containers paved the way for four of the top five intermodal weeks to date for 2010 although total intermodal volumes were 0.08 percent behind August.

AAR officials pointed out that September is typically the second or third best month of the year for intermodal as retailers are stocking up for the holidays. And domestic intermodal traffic in particular continues to see strong sequential growth due to conversions of over-the-road domestic traffic to rail and growth in international trade. The AAR also said it reflects 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.

An executive at a large intermodal marketing company told LM at the recently-held Council of Supply Chain Management Professionals Annual Conference that shippers are turning to intermodal more as a cost-effective and efficient alternative to trucking. But he cautioned that as volumes increase, railroads and IMC’s need to focus on maintaining high service levels for shippers.

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.

As LM has reported, 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.

“September was a steady month for rail traffic with new weekly records set in both carloads and intermodal,” said AAR Senior Vice President John T. Gray in a statement. “That said, intermodal traffic gains can be attributed to the upcoming holiday season and the number of railcars coming out of storage are not as significant as during the first few months of the year; all of which is evidence of a slow measured economic recovery.”

Stifel Nicolaus analyst John Larkin said on a conference call hosted by his firm last month that even with the railroads in recovery mode, current volumes are still roughly 15 percent below the peak, adding that the annual gains occurring in 2010 are against a 2009 which he described as the worst year for railroad traffic since deregulation.

Of the 18 major commodities tracked by the AAR, 14 were up on an annual basis. Metallic ores and metals were up 41.8 percent, and farm products excluding grain were up 29.1 percent. 

Railroad employee numbers fell by 121 to 152,925 employees in August (the most recent month for which data is available) from 153,046 in July. And the AAR said 17,638 rail cars were brought back into service in September, with 331,074 cars—or 21.6 percent—of the North American railcar fleet currently remaining in storage.