U.S. rail volumes on a weekly basis rose nearly 2% amid a 9% increase in intermodal traffic.
U.S. rail traffic was 522,653 carloads and intermodal units for the week ending Oct. 24, which is 1.9% higher than the same period in 2019, according to the Association of American Railroads (AAR).
Of that, intermodal traffic rose 9.4% to 295,110 containers and trailers, while carloads were 6.5% lower compared with year-ago levels, at 227,543 carloads.
On a year-to-date basis, U.S. rail volumes were 20.16 million carloads and intermodal units, which is 9.6% lower than the same period in 2019.
Although U.S. carloads are still down year-over-year, the difference between the two years is narrowing.
Indeed, some commodities, such as grain, chemicals and motor vehicles and parts, are helping to offset declines for energy-related commodities such as coal and petroleum.
Macroeconomic factors, such as consumer confidence, can influence rail volumes.
Another factor is home sales. The U.S. Department of Housing and Urban Development and the U.S. Census Bureau said Monday that new residential sales slipped 3.5% sequentially in September to 959,000. Although sales declined between August and September, September’s total is actually 32.1% higher than September 2019. Furthermore, on a year-to-date basis, new home sales are 16.9% higher in 2020 compared with a year ago.
“The pace of new home sales growth over the summer was going to slow given that the gap between sales and single-family construction reached an all-time high in August,” said National Association of Home Builders Chief Economist Robert Dietz. “Indeed, September sales of new homes that had not started construction were up 47% compared to a year ago.”
Meanwhile, the inventory of new single-family homes for sale was 284,000 in September, which is 32.1% lower than 2019.
Rising sales of new homes not only imply favorable conditions for lumber, steel and building materials, but also intermodal as people seek to furnish their homes, according to Norfolk Southern (NYSE: NSC) President and CEO Jim Squires.
Higher housing demand “really helps drive the intermodal product as well, as people furnish the house or some of our larger BCOs [beneficial cargo owners] are involved in the housing market. So there’s opportunities there,” Squires said during his company’s third-quarter earnings call on Wednesday. “We’re seeing a V-shaped recovery in both durable goods and in the housing market. So we’ve got a lot of confidence in these consumer-oriented markets as we head into ’21.”