Railroad shipping: AAR says May volumes up compared to 2009 and down compared to 2008

Slow and somewhat uneven may be the theme when it comes to assessing railroad volumes.

The Association of American Railroads (AAR) reported that monthly rail carloads for May—at 1,153,675—were up 15.8 percent year over year but down 11.8 percent compared to 2008. May carloads were down 1.1 percent compared to April. U.S. railroads averaged 288,419 carloads per week in May, down from 294,758 carloads per week in April 2010 and 288,793 in March 2010.

And intermodal traffic—at 867,516 trailers and containers—was up 18.9 percent year over year and down 3.8 percent compared to 2008. May intermodal traffic was up 2.8 percent from April. The AAR said that the weekly average of 216,879 intermodal trailers and containers in May 2010 was its highest since October 2008 and up from 209,703 in April 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.

While railroad activity is clearly picking up, 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.

“May’s rail traffic numbers continue to show mixed results,” said AAR Senior Vice President John Gray, in a statement. “Intermodal traffic has now risen for three straight months, but carloads in May 2010 were actually down a bit from April 2010.  Several economic indicators this month, including unemployment, reinforce the fact that the economy still has a long way to go to full recovery.”

What’s more, the AAR’s monthly Rail Time Indicators report indicated that while the U.S. unemployment rate fell slightly in May to 9.7 percent from 9.9 percent in April, railroads hired 1,783 employees in April, the most recent month for railroad hiring data. And the AAR added that the number of rail cars brought out of storage slowed for the first time in several months, with railroads putting just 747 cars back into service in May.

Of the 18 major commodity categories tracked by the AAR 18 saw carload gains on an annual basis. Coal was up 6.8 percent, grain was up 15.3 percent, and motor vehicles and parts was up 58.1 percent. The only commodity up compared to 2008 was the “all other carloads” category, which was up 6.1 percent.

Even though there is a long way to go in terms of a full rebound for volume growth, an industry analyst said things are going in the right direction.

“A year ago, the biggest issue was not just the volume drop but the lack of visibility in terms of how far it was going to drop,” said Anthony B. Hatch, principal of New York-based ABH Consulting. “And it appears with volumes returning that railroads can now plan over the intermediate term because customers are indicating that there is going to be at least decent improving volumes trending towards recovery back to the levels before; they are still well off of the peak but they are heading in the right direction.”