Like its preceding five months of calendar year 2016, June was no different in capping off the first half of the year for United States rail carload and intermodal volumes in that volumes remained down annually compared to the same period in 2015, according to data issued by the Association of American Railroads (AAR).
June carloads were down 7 percent, or 93,687, to 1,245,025, with six of the 20 carload categories tracked by the AAR seeing annual gains, including grain up 13.8 percent or 12,982 carloads, miscellaneous carloads up 17 percent or 4,569 carloads, and waste and non-ferrous scrap seeing a 16.4 percent, or 2,907 carloads, annual uptick. On the other end, coal continued its ongoing fall off, down 16.4 percent, or 73,194 carloads, and petroleum and petroleum products were down 22.2 percent or 15,415 carloads.
When removing coal from total volumes, the AAR noted that total carloads were off 2.3 percent, or 20,493 carloads, annually in June.
Intermodal containers and trailers for the month of June fell 5.6 percent, or 170,607 units, to 2,540,265.
Through the first 26 weeks of 2016, U.S. carloads were off 12.3 percent, or 886,579 carloads, to 6,295,216. And intermodal was off 2.1 percent, or 147,056 units, to 6,713,003, with intermodal outpacing carload volumes for the first half of the year. And total rail and intermodal volumes for this period was off 7.4 percent, or 1,033,635 carloads and intermodal units, at 13,008,219.
“Rail traffic remains relatively weak, with slightly better coal volumes in June offset by continued weakness in intermodal caused in part by an inventory overhang and global economic uncertainty,” said AAR Senior Vice President of Policy and Economics John T. Gray in a statement. “Because current economic indicators are presenting a mixed picture, it’s not clear if railroads should be pessimistic or cautiously optimistic about the near- to medium term.”
Tony Hatch, principal of New York-based ABH Consulting, noted in a recent interview that a lot of the carload declines are due to what he called “terrible energy and mediocre industrial numbers.”
“Over the last several years, we thought that as energy prices came down, there would be gains in consumer numbers,” says Hatch. “But intermodal is only doing OK at the moment, and that shows in the growth rates.”
Hatch stresses that these lower volumes are not the byproduct of railroads doing something wrong. Instead, he cites how some Class I railroads have very good earnings results amid the market challenges in the first quarter, which is reflective of the carriers ability to manage variable costs and more productive service levels as well.
For the week ending July 2, U.S. carloads were up 4.9 percent at 264,015 carloads, with intermodal up 4 percent at 265,176 trailers and containers. AAR officials said that the July 4 holiday is not part of week 26 data for 2016 but is part of the week 26 data for 2015, which, in turn overstates the volumes for this week in 2016.