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Weekly US intermodal volumes narrow gap

Class I railroad executives confirm growth of intermodal in Q2 earnings calls

The Class I railroads are hopeful that the upward trend in intermodal volumes will continue. (Photo: Jim Allen/FreightWaves)

The gap between this year’s U.S. intermodal volumes and last year’s on a weekly basis is narrowing, with last week’s volumes only 1.7% lower than the same period in 2019.

U.S. intermodal units for the week ending July 18 totaled 266,912 containers and trailers, which is 1.7% lower than the same period a year ago, according to the Association of American Railroads.

U.S. carloads are also narrowing their gap, although there is still a double-digit percentage difference between this year and last year. U.S. weekly carloads totaled 214,685 carloads, a 15.7% decline compared with the same period last year.

Combined carload and intermodal traffic for U.S.-originated loads totaled 481,597 carloads and intermodal, which is an 8.5% drop compared with the same weekly period in 2019.

Meanwhile, year-to-date U.S. volumes total 13.07 million carloads and intermodal units, 12.8% lower than a year ago.

U.S carloads (blue: RTOTC.USA), intermodal trailers (orange: RTOIT.CLASSI) and containers (green: RTOIC.CLASSI) over the past year. The data comes from the Association of American Railroads. (SONAR)

Intermodal: the Comeback Kid?

The 1.7% difference between weekly U.S. intermodal volumes this year and last year – North American intermodal units are down 1.8% on a weekly basis – comes as the Class I railroads are reporting that both domestic and intermodal volumes have been increasing steadily since their pandemic-induced lows in April.

Vessel operators that had previously canceled sailings in the third quarter have since reinstated some of those sailings, resulting in increased activity for the railroads’ international intermodal segments, companies said during their second-quarter earnings results this week and last week. Meanwhile, e-commerce has helped to boost domestic intermodal volumes, the railroads said.

This SONAR chart graphs U.S. Customs data to show maritime import shipments by port over the last three months. The chart tracks shipments to a port using a seven-day average. Blue (ICSTM.LAX) represents the Port of Los Angeles, while green (ICSTM.LGB) indicates the Port of Long Beach and purple (ICSTM.NYC) represents the Port of New York/New Jersey. Orange (ICSTM.SAV) indicates the Port of Savannah and yellow (ICSTM.HOU) represents the Port of Houston. (SONAR)

“In April and May, they were obviously tough months for us both for domestic and international [intermodal], but we started to see volumes rebound nicely in June, especially on the domestic side as the economy began to reopen and we saw inventories being replenished [for] some of the retailers,” said Mark Wallace, executive vice president for sales and marketing at CSX (NASDAQ: CSX). 

“We also saw strong volume surges for our e-commerce business as individuals stayed home but shopped online…We think that strength will continue and we’re encouraged” by the reversal of the blanked sailings, Wallace said during CSX’s second-quarter earnings call on Thursday, July 23.

At Canadian Pacific (NYSE: CP), CP Chief Marketing Officer John Brooks said, “There’s a lot of uncertainty in this [intermodal] space [with consumers and the pandemic outcome]…But I think our forecast right now is we continue to see, I would say a little bit of a surge here continue in the third quarter and then maybe a little bit of normalization as you move back into the fourth quarter. But that’s going to all be dependent on what we see happen with this pandemic.”

But even if the coronavirus pandemic lingers for several months, e-commerce and the do-it-yourself movement are two factors that could help support intermodal volumes in the back half of the year.

“We are very bullish on the strength of the consumer in North America, even more so on the consumer living in the U.S. in a big city, because we have a three-coast network and we can access some of the highly populated areas,” said Canadian railway CN (NYSE: CNI) CEO JJ Ruest during his company’s second-quarter earnings call. “And the consumer disposable income is really key to CN’s future. And the product that’s most-suited to exploit the consumer spending and disposable income is intermodal. And the business coming by the port is definitely one of our mid- to long-term strategies to increase our business in that space.”

Click here for more FreightWaves articles by Joanna Marsh.

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Joanna Marsh

Joanna is a Washington, DC-based writer covering the freight railroad industry. She has worked for Argus Media as a contributing reporter for Argus Rail Business and as a market reporter for Argus Coal Daily.