Railroad shipping: Volumes take a dip for week ending July 10, says AAR

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The Association of American Railroads (AAR) today reported that monthly rail carloads for June 2010 were up 10.6 percent compared with last year, but still down 10.2 percent compared with June 2008.

By Jeff Berman, Group News Editor
July 16, 2010 - LM Editorial

Railroad volumes for the week ending July 10 were down year-over-year and compared to 2008, according to the Association of American Railroads (AAR)

Weekly carload volumes—at 252,963—were down 3.5 percent compared to 2009 and down 20.8 percent compared to 2009. This was below the week ending July 10, which hit 287,777 carloads. But the week ending July 10 included the July 4 holiday, and the comparison weeks in 2009 and 2008 did not, said the AAR.  The week ending April 24, which hit 294,218 carloads, is the highest weekly carload level since December 2008, according to the AAR.

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.

Carload volume in the East was down 5.7 percent year-over-year and 29.9 percent compared to 2008. And out West carloads were down 2.3 percent year-over-year and down 14.8 percent compared to 2008.

Intermodal traffic—at 192,954 trailers and containers—was up 9.1 percent year-over-year and down 16.8 percent compared to 2008. This paled compared to the week ending July 3, which hit 231,286 trailers and containers and was its highest output since week 42 of 2008.

Despite the relatively low intermodal volume for the week ending July 10, which included the July 4 holiday, intermodal performance has been on a roll of late, due, in part, to a tightening of truckload capacity, which has some shippers converting to intermodal. 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.

The AAR reported earlier this week that intermodal volumes for the month of 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 in June was its highest since October 2008, topping the previous high compared to October 2008 from May, which hit 216,879 trailers and containers.

Intermodal’s strength was apparent in J.B. Hunt’s second quarter earnings release this week, with intermodal accounting for 57 percent of its quarterly revenue. Stifel Niclolaus analyst John Larkin wrote in a research note that this is reflective of intermodal “continuing its market dominating performance in the [second quarter].”

As LM has previously reported rail industry stakeholders remain optimistic about railroad growth throughout the remainder of 2010. Among the things they have pointed to include increased industrial production growth in the form of manufacturing and new orders indices, as well as gradual consumer spending, among other factors, as drivers for these gains. But even though volumes are slowly recovering, they are still well below previous peak levels.

And volumes are likely to remain strong on a year-over-year basis until at least mid-summer for most of the major carload categories, wrote Avondale Partners analyst Donald Broughton in a research note.

On a year-to-date basis, total U.S. carload volumes at 7,591,926 carloads are up 7.4 percent year-over-year and down 13.2 percent compared to 2008. Trailers or containers at 5,627,846 are up 12.8 percent year-over-year and down 6.6 percent compared to 2008.

Of the 19 carload commodities tracked by the AAR, 6 were up year-over-year. Metallic ores were up 72.8 percent and metals and metal products were up 42.4 percent.

Weekly rail volume was estimated at 32.0 billion ton-miles, a 22.0 percent year-over-year increase. And total volume year-to-date at 807.9 billion ton-miles was up 8.9 percent year-over-year.

Click Here for a (PDF) copy of Rail Time Indicators - A Review of Key Economic Trends Shaping Demand for Rail Transportation



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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