Market Overview

U.S. Rail Volumes Drift Lower

U.S. Rail Volumes Drift Lower

Year-to-date U.S. rail volumes fell yet again this week, although improving economic indicators signal that rail volumes could moderate in the weeks and months ahead.

For the week ending July 6, the U.S. operations of the Class I railroads originated 13.9 million carloads and intermodal units year-to-date, a 3.2 percent decline from the same period in 2018, according to data from the Association of American Railroads (AAR). Of that, U.S. carloads were down 3.1 percent at 6.8 million carloads, while U.S. intermodal containers and trailers were down 3.3 percent at nearly 7.2 million units.

In contrast, Canadian year-to-date rail volumes rose again, with total volume growing 2.1 percent to nearly 4.1 million carloads and intermodal units. Year-to-date Canadian rail volumes represented roughly 21 percent of total North American rail volume, while U.S. volumes represented about 73 percent of overall North American volume.

Despite consecutive weeks of volume declines, industry observers think that U.S. rail volumes could moderate in the second half of the year, now that the rail network is no longer experiencing delays from flooding in the Midwest. Continued efficiencies from precision scheduled railroading, an operating model adopted by all the Class I railroads except BNSF, could also result in higher train velocities and lower dwell times.

"If there's a silver lining, volume declines should moderate into the second half of 2019 if seasonal demand patterns hold," Susquehanna Financial Group analyst Bascome Majors said in a July 10 note. 

Meanwhile, some U.S. economic indicators pointed towards growth in June. The Bureau of Labor Statistics (BLS) reported that the economy added 224,000 workers to payrolls in June. This exceeded consensus estimates of a 170,000 job gain and serves as an impressive rebound a marked slowdown from disappointing 72,000 gain in the previous month, FreightWaves reported earlier this week.

Image sourced from Pixabay

Posted-In: Freight Freightwaves Logistics rail volumes Supply ChainNews General


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