Just when new monthly reports on U.S. employment, home values and factory demand confirmed the economic recovery sputtered toward a stall this spring, rail cargo figures suggest freight traffic already may be climbing out of its rut.
The latest data from railroad sectors large and small show volume improving over the past month for certain shipment categories closely linked to industrial demand.
That might sound at odds with the sharp drop the Institute for Supply Management reported in its closely watched gauge on factory activity, a report that fueled new fears of a deepening economic slump.
Although the ISM index slowed to 53.5 in May from 60.4 a month earlier, anything above 50 indicates growth in the factory sector. And Bradley Holcomb, head of the group’s business survey committee, said the May reading, if continued for an entire year, would be consistent with 3.8 percent growth for the broader economy.
Earlier rail data indicated a slump in April, followed by a slight recovery in May, with most segments still lagging end-of-March peaks. By last week, however, signs of progress emerged.
Volume for metals and products picked up by major U.S. railroads peaked at 11,712 new carloads in the week ending April 30, according to the Association of American Railroads. But that was also the first of a five-week run in which carloads consistently topped the 10,000 mark.
In short, the best sustained performance this year in hauling metal products came at the end of April and throughout May.
Among North American short line railroads, the biggest cargo category is chemicals, needed to produce a broad range of finished factory goods, packaging materials and to help grow crops.
The RailConnect traffic index by RMI, which gets volume reports from about 340 of the continent’s 550 or so small railroads, had its strongest week for chemical shipments in mid-February with 18,582 tank carloads.
However, a springtime slump that developed for those shipments bottomed out at 16,783 carloads in the week ending April 23, and volume has been recovering since. In the May 28 week, short lines picked up 18,521 chemical loads, the second-highest total this year.
The situation was even brighter for intermodal as June started, although that sector also took its lumps this spring. After peaking in actual container and trailer counts as the first quarter ended, intermodal volume slid in April and grew slowly in early May.
But container originations by major U.S. railroads hit the highest levels of 2011 in the last two weeks of May, at more than 201,000 units a week, despite trailer loadings remaining below their peaks from February. And, for the final week of last month, the top U.S. rail lines picked up more intermodal loads than any other time this year.
The freight data isn’t altogether reassuring, however, either on the bulk carload or intermodal sides of the business. Anthony Hatch of ABH Consulting said the National Association of Rail Shippers’ conference in San Francisco late last month addressed the slowdown. Recent traffic, he said, has seen “sluggish growth, but growth nonetheless.”
Total carload volume remains below the high of the April 2 week, and the weak recovery has left a few cargoes trailing last year’s levels.
That includes a 12.9 percent drop in U.S. major railroad loadings of logs or other primary forest products amid a double dip in the housing market. A related category of stone, clay and glass products, which tends to rise or fall with building construction, is up just 1.8 percent.
Shipments of coking coal used to heat steelmaking furnaces are down 2.6 percent from the 2010 pace as automotive shipments declined and demand slowed for new auto frames and doors. Even iron and steel scrap, the cheapest of input materials, is up just 1.2 percent from a year ago.
Contact John D. Boyd at email@example.com.