March rail traffic growth shows steady gains, says AAR

By Jeff Berman, Group News Editor
April 12, 2011 - LM Editorial

March rail carload and intermodal volumes both showed growth on an annual and sequential basis, according to data from the Association for American Railroads (AAR).

March rail carloads—at 1,493,553—were up 3.4 percent compared to March 2010 and up 11.2 percent compared to March 2009, said the AAR. The weekly carload average in March checked in at 298,711. Carloads have been up for 13 straight months and on a seasonally-adjusted basis were up 2 percent compared to February

AAR officials said that the annual March gain from 2010 to 2011 is the lowest of any month percentage-wise since the rail industry first showed signs of emerging from the recession in early 2010. They added it is also due to tougher annual comparisons, as 2010 volumes were up sharply compared to 2009, coupled with the fact that March 2010 included the Good Friday holiday, whereas 2010 did not.

Intermodal volumes in March continued their impressive run at 1,111,301 trailers and containers for an 8.5 percent annual gain and were up 0.5 percent compared to February on a seasonally-adjusted basis. March also marks the 16th straight month intermodal volumes have been up year-over-year.

The weekly intermodal average in March was 222,260 intermodal trailers and containers per week.

For the entire first quarter, total intermodal loadings were 2,856,227, with trailers at 435,018 for a 6.7 percent gain and containers at 2,421,209 for a 9.1 percent gain and 85 percent share of total intermodal volumes, showing further evidence of what the AAR described as “a containerization trend in U.S. intermodal traffic.” The AAR also explained that total intermodal container volumes for the first quarter were slightly behind the record high from the third quarter of 2010.

“As the economy steadily improves, rail traffic is continuing to make gains as well,” said AAR Senior Vice President John Gray in a statement.

With diesel prices rising steadily in recent months, more shippers continue to turn to intermodal as a viable shipping option, particularly on the domestic intermodal side.

A recent research note from Tony Hatch at ABH Consulting explained that “domestic intermodal conversion can solve three existing and/or emerging problems for shippers:  supplying capacity in an era of truckload shortage; lowering overall supply chain costs (among other reasons is its significant fuel and labor cost advantages); and lowering carbon footprints in an era when that topic has moved from cocktail chatter to a real decision point.  Improved rail service, better information technology and huge (recent and planned) capital expenditures on the network have all helped.”

Even with a solid showing in March and ongoing signals of increased economic activity occurring, railroad volumes are still trailing 2008 and previous years on an absolute volume basis. And as LM has reported, it stands to reason that trend will likely continue, even though industry analysts have noted that rail traffic is stronger than the macroeconomic, business, and general news headlines indicate.

Stifel Nicolaus analyst John Larkin wrote in a research note that in general, first quarter rail volumes were roughly in line with what his firm had expected one quarter ago, “demonstrating the resilience of the North American economy in the face of a multitude of ongoing economic headwinds.”

Larkin also noted that the quarter was impacted by harsh weather conditions in many parts of the U.S.

Of the 19 major commodities tracked by the AAR, 15 were up year-over-year. Metallic ores and motor vehicles and parts were up 45.8 percent and 17.6 percent, respectively. Primary forest products and waste and nonferrous scrap were down 15.4 percent and 11.7 percent, respectively.

Railroad employee numbers increased by 1,198 to 154,502 employees in February from January (the most recent month for which data is available). And total employment in February 2011 was 6,885 higher than February 2010 for a 4.7 percent gain, said the AAR.

And as of April 1, the AAR said that 283,649 freight cars—or 18.7 percent of the total fleet—were in storage, a decrease of 22,667 cars from March 1.

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About the Author

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Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).


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About the Author

Jeff Berman, News Editor
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman.

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