U.S. and Canadian railroads saw a 4.4 percent increase in originated intermodal traffic in August, compared with the same year-earlier period.
Carload traffic also was higher by 9,467 cars, or 0.5 percent, for the five week period ending Sept. 2. Intermodal continued the year-long pattern of traffic gains, driving towards a fourth consecutive annual record. U.S. carriers had a 3.8 percent increase, while Canadian railroads saw intermodal volume increase 9 percent.
In what has become a repetitive occurrence, trailer-on-flatcar volume was down 12.4 percent, while the number of containers handled increased 12.3 percent. Trailers continue to reflect mostly domestic traffic with some import transloads from West Coast ports, while containers are a mix of import-export traffic with a growing amount of domestic business.
An 11 percent surge in metallic ores and minerals accounted for more than the total carload gain. All other major commodity groups except chemicals and forest products, which were flat with the same 1999 period, had declines.
Motor vehicles and equipment, among the higher margin traffic handled by railroads, was down nearly 1,000 cars, or 0.6 percent. Ford Motor Co.'s closure of three plants that assemble popular sport utility vehicles and light trucks as part of the massive Firestone tire recall occurred during the reporting period and continued into September, probably accounting for the decline.
Morgan Stanley Dean Witter rail analyst James Valentine wrote in a note to clients that he expected the Ford production halt to equal 1,500-1,900 carloads, and thought the greatest impact would be on Norfolk Southern Corp., with some impact on Union Pacific Railroad. A small decline in inbound parts would further hurt the category as well as intermodal. Many auto parts shipments are in intermodal containers, although intermodal is not broken out by commodity.
Coal appears to be rebounding, as extremely hot weather in some parts of the country caused utilities to increase coal burn rates to meet demand for electricity. With excess coal inventories accumulated in anticipation of Y2K disruptions drawn down, coal shipments appear to be returning to more normal levels.
Total coal carloads were up just 0.2 percent in August, with UP having a 16,920 car, or 10.7 percent, jump. Burlington Northern Santa Fe Corp., which originates more coal than any other carrier, was down 3.7 percent, and Norfolk Southern and CSX Transportation reported gains of 1.8 percent and 1.4 percent, respectively.
UP serves more utility plants in the heat-scorched Southwest, while BNSF has greater market penetration into the Midwest, where Chicago has not experienced a single 90-degree day this year. NS and CSX comparisons to 1999 were easy, as both railroads last year were in the throes of congestion that limited their ability to handle available traffic following their division of the Conrail operations.
The picture was mixed for carload originations. UP was up 10,645 cars, or 2.4 percent. NS was up 6,137 cars, or 1.8 percent. Canadian National and Canadian Pacific had small gains of less than 1 percent. Illinois Central, a subsidiary of Canadian National, had a 12.4 percent increase in originated and received carloads but a small decline in originated carloadings, suggesting that it is getting more shipments off CN since it was acquired by the Canadian carrier in 1999. CN has said it plans to include IC traffic in its data in coming months.
The 16,920 car coal increase was more than UP's total carload gain of 10,645, or 2.4 percent. UP had modest increases in non-metallic minerals and products, motor vehicles and equipment, and metallic ores and metals. These largely were offset by declines in chemicals, agricultural products and forest products.
BNSF was hurt by its coal decline and an 11.8 percent drop in grain shipments, as U.S. exports remain in the doldrums and farmers hold onto their harvested crops until prices firm or they are forced to sell to repay crop loans. It had significant gains in metallic ores and metals, up 29 percent, and non-metallic minerals and products, up 5.4 percent.
BNSF intermodal traffic was up 8.6 percent, or 29,007 units, and UP had a 10 percent, or 30,005 unit increase, easily outdistancing the rest of the industry, all of which had increases except for CSXT. The big eastern railroad recently withdrew from trailer markets in certain corridors.