U.S. rail carload and intermodal volumes see another month of declines, reports AAR

United States rail carload and intermodal volumes each saw annual declines, according to data issued this week by the Association of American Railroads (AAR).

Rail carloads––at 1,055,386––fell 4.6%, or 50,672 carloads, annually. AAR said that eight of the 20 carload commodity groups it tracks saw annual gains, including: petroleum & petroleum products, up 3,612 carloads or 7.8%; all other carloads, up 3,090 carloads or 13%; and stone, clay & glass products, up 2,567 carloads or 7.5%.

Commodities that saw declines in August 2019 from August 2018 included: coal, down 36,301 carloads or 9.9%; crushed stone, sand & gravel, down 5,751 carloads or 5.4%; and grain, down 5,365 carloads or 6%. When excluding coal, AAR said August carloads were down 1.9%, or 14,371 carloads, and when excluding coal and grain, August carloads were down 1.4%, or 9,006 carloads. 

Intermodal containers and trailers––at 1,089,849––were down 5.4%, or 61,839 units, annually.

“While the strength of the overall economy remains unclear, in the last quarter it has become much more evident that the portion of the economy which generates freight — manufacturing and goods trading — has weakened significantly,” said AAR Senior Vice President John T. Gray in a statement. “Total U.S. freight carloads have fallen on a year-over-year basis for seven straight months, and that’s true even after excluding coal and grain, the major rail commodities least sensitive to overall economic health. Year-over-year intermodal volumes, typically a reliable indicator of consumer spending and intermediate manufacturing demand, have fallen for seven straight months. We had a similar pattern in 2016, when rail traffic was weak and the overall economy wobbled but didn’t fall down. Railroads are hopeful that the uncertainty plaguing economies here and abroad will dissipate soon and solid economic and industrial growth will return.”

Through the first eight months of 2019, U.S. rail carloads––at 8,871,704––were down 3.4%, or 310,246 carloads, annually. And intermodal units––at 9,328,443––dipped 3.9%, or 375,964 units.

While intermodal volumes saw another month of annual declines, AAR noted in a recent edition of its Rail Time Indicators report that 2019 remains on track to be the second highest intermodal volume year ever, second only to 2018.

In a recent interview, the AAR’s Gray said that it is likely there will be substantial growth in intermodal going forward.

“But it is like everything else in the economy, like the stock market, there are some troubling things, too,” he said. “That is reflective of the uncertainty in the economy right now. A lot of that is due to trade, and other parts of it are due to people being concerned about how long the growth in the economy has been going on and if we are waiting or a correction there. Nobody really knows at this point. The uncertainty within the economy is kind of creating hesitation for things like goods production. If you look at the total economy…what you will hear is GDP coming in at 3.1% for 2018. That is great for the over all economy, but when you look at the underlying components, things like the goods portion of the economy and the amount of the economy that is really related to the things we can handle, it appears that the growth on that has been more in the 1%-to-1.5% range. The goods portion of things is what we focus on, rather than the total economy. We have looked at the statistical relationship between the total economy and rail traffic and you can get about as good a relationship between the two random numbers as you can. And when you look at the relationship of the goods portion of the economy, you then get a very different picture. It is tightly related.”

For the week ending August 31, AAR reported that U.S. rail carloads––at 268,597––were down 4.2% annually, and intermodal units––at 273,348––decreased 4.9%.