North American carloads of motor vehicles and parts tumbled nearly 67% on a weekly basis as the looming coronavirus pandemic prevented would-be buyers from entering automobile showrooms.
North American railroads originated 9,725 carloads of motor vehicles and parts for the week ending March 28, down 66.8% from the same period in 2019, according to the Association of American Railroads (AAR). U.S. carloads represent about 56% of that total, at 5,423 carloads. This was a 69.5% decline from the same week in 2019.
“U.S. carloads of autos and auto parts last week were down 70% from the same week last year as auto production declined to zero and consumer spending has begun to shrink demand,” said AAR Senior Vice President John T. Gray.
On a weekly basis, North American carloads fell 8.3% to 320,231, with U.S. carloads slipping 9.1% to 219,844.
Weekly North American intermodal volumes fell 14.4% to 306,268 intermodal units, with U.S. intermodal units down 14.2% to 229,923 intermodal containers and trailers.
One question as the rail industry heads into the second quarter is how much intermodal volumes will help support overall U.S. rail traffic. On the one hand, Chinese manufacturing has started to return to normal after the country extended the time off for the Lunar New Year because of the coronavirus outbreak there. The return to more normal manufacturing levels in China could translate into steady activity at U.S. ports.
“While intermodal volume last week was down 14% year-over-year, total movements for the five railroads serving the West Coast ports remained steady for a fifth consecutive week, reinforcing the expectation that we may have seen the bottoming of the Asia-North America trade,” Gray said.
But the coronavirus pandemic’s impact on U.S. rail traffic could also mute any positive volume changes for intermodal, according to Wall Street analyst Bascome Majors with Susquehanna Financial Group.
“We expect to see the typical post-CNY [Chinese New Year] lift as more likely to play catch-up at the ports into April, and at this point any railroad benefit is likely to be more than offset by the weakening domestic demand backdrop from non-essential retail and other markets (i.e., the freight may sit near the port for quite some time),” Majors wrote in an April 1 research note.