2013 intermodal volumes set new record and carload is down slightly, reports AAR
January 13, 2014 - LM Editorial
United States railroad and intermodal volumes were again mixed in 2013, according to data issued by the Association of American Railroads (AAR).
Carload volume—at 14,608403 million—was down 0.5 percent compared to 2012’s 14,682,219 and 3.6 percent below 2011’s 15,155,992. AAR officials said that going back to 1998, when it initially began collecting data, the only year which saw lower total carload volumes was 2009, which was at the height of the recession. According to AAR data the peak year for U.S. cartloads was 2006 at 17.3 million, with 2013 coming in 15.6 percent—or 2.7 million—below.
olumes reached an all-time high at 12,831,692 trailers and containers, which topped 2012’s 12,282,221 by 4.6 percent annually
U.S. intermodal vand 2011’s 11,892,418 by 7.9 percent. 2013 also outpaced the previous high, 2006’s 11,732,750, by 8.6 percent or 549,741 trailers and containers.
Putting the 2013 intermodal output into perspective, the AAR said that in 1990, containers accounted for 44 percent of intermodal volume and by 2000, their share was up to 69 percent, with 2013 setting a new record at 88 percent. It reiterated that it is much more cost effective to move rail intermodal shipments in containers than in trailers, largely because containers can be double-stacked and are easier to load onto and take off a railroad flat car than trailers.
“2013 ended the way it began — strong intermodal, weak coal, and mixed performance for other commodities, resulting in a year for rail traffic that could have been much better but also could have been much worse,” said AAR Senior Vice President John T. Gray in a statement. “A variety of indicators seem to be saying that the economy is slowly strengthening; a trend we expect to continue in 2014.”
Of the 20 commodity groups tracked by the AAR, 11 saw gains in 2013. Petroleum products were up 31.1 percent or 167,868 carloads, and crushed stone, gravel, and sand were up 8.3 percent or 81,023 carloads. Coal dipped 256,751 carloads or 4.3 percent, and grain was down 8.0 percent or 81,309 carloads.
But when coal and grain (which was down 4.1 percent at 473,892 carloads) are excluded, total U.S. carloads are up 3.4 percent annually from 2012 to 2013.
Carload growth continues to trail intermodal growth for a few different reasons, according to Anthony B. Hatch, an independent railroad analyst and principal of New York-based ABH Consulting.
“One part has to do with this economic recovery being slower than normal as this was a bigger than normal recession and was a much bigger shock to the system than any other recession since 1933,” he explained. “Another reason is the 50-year drought that hit grain and a secular one-time permanent hit to coal (which accounted for 39.5 percent of all 2013 carload volume). Coal peaked in 2008 and since then has taken about a 20 percent hit and dropped about 12 percentage points of market share in terms of U.S. utility fuel use to natural gas. If you look at just the cyclical carload traffic minus bulk commodities and even taking out intermodal, [volume] would likely look closer to 2006.”
As for coal, Hatch said coal carloadings are likely to run a bit more stable going forward—and possibly increase this year—running with weather patterns and essentially will be a flat commodity with a slight downward trend for the next 35 years as plants expire and are likely to be replaced by non-coal plants.
Looking at 2014 and beyond, Hatch said there is plenty to be optimistic about when it comes to growth on the tracks due to: the downward growth rate of coal stabilizing from about 15 percent to low single digits; the drought ending by the fourth quarter for grain; cyclical traffic remains growing at decent low single-digits; the capital investments being put into production around the U.S. chemical industry, the Mexican auto industry, and fertilizer industries, which he said will begin to translate into increased growth later this year; and the ongoing domestic intermodal, housing, and automotive stories, too.
“This all means we should be past the transition into the second phase of railroad growth,” he said.
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