AAR reports annual U.S. carload and intermodal declines for September 2016

Annual declines for both United States rail carload and intermodal volumes remained intact for the month of September and the week ending October 1, according to data issued this week by the Association of American Railroads (AAR).

September carloads dropped 5.4 percent, or 61,455 carloads, annually to 1,068,644. And nine of the 20 carload commodities tracked by the AAR were up annually in September, including: grain, up 11.2 percent or 9,860 carloads; waste and nonferrous scrap, up 28.8 percent or 3,725 carloads; and nonmetallic minerals, up 7.5 percent or 1,414 carloads. Commodities that saw declines in September 2016 from September 2015 included: coal, down 13.1 percent or 53,896 carloads; petroleum and petroleum products, down 21.6 percent or 11,810 carloads; and primary metal products, down 9.5 percent or 3,459 carloads. The AAR said that when excluding coal, carloads were down 1.1 percent or 7,559 carloads in September 2016 from September 2015.

Intermodal containers and trailers were down 4.2 percent, or 45,192 units, to 1,040,934 in September.

On a year-to-basis through the first 36 weeks of 2016, carloads are down 10.5 percent, or 1,142,905, at 9,737,216, and intermodal containers and trailers dropped 3.2 percent, or 333,619 containers and trailers, to 10,083,612 units.

“Rail traffic in September was more of what we have come to expect this year: big declines in energy related products, continued weakness in intermodal and most other export markets, but with some strength in grain," said AAR Senior Vice President of Policy and Economics John T. Gray, in a statement. “The fact is, in many of their markets, railroads are facing significant market uncertainties.  It isn't helping that rail regulators are seeking to put additional costly regulatory burdens on railroads too.  The inefficiencies and unnecessary costs railroads would incur if regulators succeed would make it that much harder for railroads to meet the needs of their customers and to allow the capital investment necessary to adapt their networks to a changing marketplace.”

The regulatory burden was also driven home by AAR President and CEO Ed Hamberger, too.

There is a direct connection between smart public policies, railroad investments and public benefits,” Hamberger explained. “Today’s economic regulations allow railroads to make what is necessary to provide the efficient, reliable service their customers need to grow. Yet, unfortunately, regulators continue to advance rules that would undermine railroads’ ability to earn the revenues needed to maintain and further modernize the freight rail system.

As an example, he cited the Surface Transportation Board’s recently proposed rule that would require railroads to open up their lines to competitors, forcing carriers to turn over their tracks to other railroads without showing competitive abuse. And he also pointed to how the Board proposed to re-regulate certain commodities previously determined are subject to competition, including from trucks, as well as the STB looking to impose government price controls, which would threaten the railroads’ ability to invest back into their networks.

“The industry has adjusted in the past, retooling logistics and operations brought on by changes in the movement of commodities,” he said. “But for the STB to advocate rules that force a change in the industry’s business model, is to regulate with blinders on.”

For the week ending October 1, U.S. rail carloads fell 4.4 percent annually to 277,157, and intermodal containers and trailers decreased 3.5 percent to 272,014 containers and trailers.