Intermodal up but rail carloads down last week

The quiet period before third-quarter earnings releases

Wednesday marked the end of the third quarter. In a little over two weeks, the Class I railroads will begin announcing their third-quarter results. Although not everyone has said yet when their announcements will occur, Kansas City Southern (NYSE: KSU) will report its results on Oct. 16, Canadian railway CN (NYSE: CNI) will report on Oct. 20, CSX (NASDAQ: CSX) on Oct. 21, Union Pacific (NYSE: UNP) on Oct. 22 and Norfolk Southern (NYSE: NSC) on Oct. 28. Several rail manufacturers will also be releasing their quarterly earnings results during this time frame.

Among the topics that could be explored are the railroads’ views on intermodal, particularly since the trucking market is tight, the fall peak shipping season is underway and some West Coast ports are experiencing congestion. Rail observers might also be wondering whether the railroads will update their sales guidance for the year since the end of 2020 is closer at hand.

“There have been lots of surging intermodal volumes reported these past two months. So, intermodal rail is coming back, correct? All is right with the intermodal rail world … . [But] is there 100% certainty? No, a perfect outlook about the future is unreasonable given the complexity of intermodal supply chain lengths and the number of players involved,” said FreightWaves contributor Jim Blaze in his latest commentary.

Another question could be whether the railroads have sufficient network capacity not only to handle intermodal volumes but carloads as well, especially as questions about rail service have arisen in recent weeks.

Indeed, even though the COVID-19 pandemic slashed rail volumes, some commodities have rebounded since the volume troughs of April and May.

For instance, even though volumes for grain, farm products and forest products are still lower on a year-to-date basis, that difference has narrowed over the past several weeks. Meanwhile, commodities such as coal continue to face a systemic decline.

Last week, year-to-date grain carloads totaled 822,547, a 2.5% decline year-over-year, while farm products were only 1.7% lower, at 595,106 carloads. Year-to-date chemicals carloads were down 5.1% to 1.2 million carloads, and forest products carloads were 6.4% lower, at 360,820. Altogether, these carloads represent roughly 36% of overall U.S. carload volume year-to-date.

Click here for more FreightWaves articles by Joanna Marsh.

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