Year-to-date and weekly U.S. rail traffic fall again

U.S. rail traffic dipped again for the week ending April 20, according to data from the Association of American Railroads.

Year-to-date U.S. rail traffic totaled 8.24 million carloads and intermodal units, a 1.8 percent decline from the same period in 2018. Of that total, U.S. carloads, which represented 48 percent of traffic, were down 2.7 percent to 3.97 million carloads, while intermodal units fell 1 percent to 4.27 million units.

Rail traffic was also down from a weekly perspective. For week 16 of 2019, total U.S. traffic fell by 2.4 percent to 526,141 carloads and intermodal units compared with the same weekly period in 2018.

Of that total, U.S. carloads were down by 0.9 percent to 262,011. All commodities posted declines except for three: coal, which grew by 4.6 percent to 84,216 carloads and represented 32 percent of carload volume; petroleum and petroleum products, which grew by 37.8 percent to 12,889 carloads and represented 4.9 percent of carload volume; and “other,” a category that consists of waste and nonferrous scrap and any miscellaneous volume. That category rose 3.4 percent to 9,654 carloads and represented 3.7 percent of carload volume.

Also included in the total U.S. rail traffic figures are intermodal units. U.S. intermodal units were down 3.9 percent to 264,130. Intermodal units represent half of all U.S. rail traffic.

The rail companies that have reported first quarter earnings so far were optimistic that rail volumes would be steady to higher in the coming weeks. Demand for heavy-duty vehicles, increasing domestic production of plastics and higher industrial production levels are factors that could contribute to rail volume growth this year, executives said.

“The top line outlook, of  course, remains dependent on underlying economic conditions. We are diligently monitoring our markets and are in constant dialogue with our customers. But generally, end-market demand remains stable,” said Jim Foote, CSX (NYSE: CSX) president and chief executive officer, during his company’s first quarter earnings call on April 16.

Meanwhile, rail intermodal volumes could face some competition from a looser truck market, although the railroad officials said improving service that they expect to result from the implementation of precision scheduled railroading could sway customers to rail.

“Domestic intermodal volume could be impacted by a softer truck market in 2019, which may limit the opportunities for over-the-road truck conversion. However, longer-term fundamentals still provide a bullish outlook for over-the-road conversion,” said Kenny Rocker, Union Pacific (NYSE: UNP) senior vice president for marketing and sales, during his company’s first quarter earnings call on April 18.