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US Rail Volumes Still Sluggish

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US Rail Volumes Still Sluggish

The slump in U.S. rail volumes persisted for another week, according to the latest data from the Association of American Railroads.

Year-to-date U.S. rail volumes totaled 22.3 million carloads for the week ending Oct. 26. That is a 4.3% drop from the same period in 2018. Of that total, the U.S. operations of the Class I railroads originated 4.2% fewer carloads, at 10.8 million units, and handled 4.4% fewer intermodal units, at 11.5 million intermodal containers and trailers.

On a weekly basis, total U.S. rail traffic tumbled 8.8% to 513,147 carloads and intermodal units compared with the same week in 2018. U.S. carloads fell 9.4% to 243,321, while intermodal units fell 8.3% to 269,826 containers and trailers.

U.S. rail carloads have been trending lower in recent weeks. Source: SONAR Surf

The Class I railroads generally expect a fall peak this year, although executives said the peak would likely be subdued compared with past years. A fall peak is when freight transportation demand traditionally increases in the latter half of the year due to factors such as impending holiday sales and grain harvests.

"Our expectations for peak are somewhat muted this year. I think we'll see a little bit of a bump, but not the traditional ball peak. …The consumer economy is still doing relatively well," said Mark Wallace, CSX's (NASDAQ: CSX) senior vice president for sales and marketing, during CSX's third-quarter earnings call Oct. 16.

He continued, "[In the] fourth quarter, because of the economy and because of the consumer economy, we're hoping to have a relatively good post-Thanksgiving holiday peak. So into the Christmas time frame. Hopefully, people order a lot of stuff online, and we have the pleasure and the honor of moving a lot of that stuff."

Although the fall peak could lift rail volumes somewhat in the fourth quarter, overall volumes could still be pressured by uncertainty in the macroeconomic environment, Wallace said. 

"I think [the fall peak] will help our intermodal volumes this quarter. But going into next year, as we said, we're not going to give you a lot of guidance there. It really depends on what's driving the economy and where we are. But longer term, as we get through all these lane rationalizations and get through all this mess in a good solid economy, I would expect intermodal to do very well," Wallace said.

But others within the freight transportation sector overall are uncertain whether freight will see a fall peak at all this year. Freight logistics firm Hub Group (NASDAQ: HUBG) questioned whether it would see a fall peak, amid lower demand and increased competition from the truckload and intermodal markets. Rail lane rationalizations have also contributed to lower volumes for the company, it said when it reported third-quarter earnings on Oct. 30.

Image Sourced from Pixabay

Posted-In: Freight Freightwaves rail volumes Railroads IndustryEarnings News General

 

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