Market Overview

U.S. Rail Volumes Continue Dip

U.S. Rail Volumes Continue Dip

U.S. rail volumes fell yet again for the week ending July 20, according to data from the Association of American Railroads.

Total U.S. rail traffic fell on both a weekly and year-to-date basis compared to the same periods in 2018. On a year-to-date basis, U.S. rail volume totaled 14.98 million carloads and intermodal units, a 3.4 percent drop from a year ago. Of that, U.S. carloads totaled 7.29 million carloads, a 3.1 percent decrease from the second quarter of 2018. U.S. intermodal containers and trailers fell 3.5 percent to 3.69 million intermodal units.

On a weekly basis, the U.S. operations of the Class I railroads originated 526,010 carloads and intermodal units, which is 4.9 percent fewer than the same period in 2018. U.S. carloads fell 4.2 percent to 254,434 carloads while intermodal units dropped 5.6 percent to 271,576 intermodal containers and trailers.

Rail volumes in Mexico were also down both weekly and year-to-date. Mexican rail traffic was down 3.4 percent year-to-date to 1.08 million carloads and intermodal units. On a weekly basis, Mexican rail volumes fell 2.4 percent to 38,955 carloads and intermodal units. But despite these declines, Mexican rail volumes were up by 1.7 percent year-over-year on a rolling, four-week basis.

Meanwhile, Canadian rail volumes continued to grow year-over year. Canadian rail volumes were up 2.1 percent to 4.37 million carloads and intermodal units year-to-date, Weekly Canadian volumes rose 3 percent to 153,968 carloads and intermodal units.

Despite reporting lower second quarter volumes this week and last week during second quarter earnings calls, Class I railroads reported higher revenues or profit gains amid cuts to operating expenses. 

The rail companies are "cautiously optimistic" that rail volumes could grow in the second half of the year, but they also told investors that they were looking at ways to trim costs further in order to increase their profit prospects for the remainder of the year.

"We are focused on the things that we can control, and those things are delivery of revenue growth," said Norfolk Southern (NYSE: NSC) chief executive officer Jim Squires during his company's second quarter earnings call on July 24.

Squires continued, "At the same time, we are very focused on the productivity and efficiency opportunities that we have uncovered through Clean Sheeting and through TOP21 implementation," two initiatives in NSC's version of precision scheduled railroading. "So, we're focused on the things that we can control and we are very confident that we will hit our goals this year, at least 100 basis points improvement in the operating ratio over last year and 60 by 2021."

Image sourced from Pixabay

Posted-In: Freight Freightwaves Logistics Q2 earningsEarnings News Markets General


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