Rail Traffic Hits Year's Low

Despite some lift from intermodal volume, major U.S. railroads by two important measures had their worst week so far this year.

Rail carloads, which include everything from bulk materials to finished motor vehicles and the in-between factory goods that can ride in large railcars, reached just 247,258 units in the week ending May 16, said the Association of American Railroads.

That is lower than any time since the end of December, when much of the industrial economy was shutting down to wait out the financial storm and ensuing collapse in demand.

Train hauls of intermodal trailers and containers reached 188,435 units, up by nearly 7,000 from a week earlier and the highest since the Feb. 14 week.

Still, total estimated ton-miles of combined carload and intermodal freight carried by large U.S. railroads, sank to the year’s low at 26.2 billion. That was down 24.3 percent from the same point in 2008.

A number of economists, and some rail executives, have suggested that the freight market’s decline is bottoming out. The traffic figures suggest the market could move along the bottom for a while.

One notable area of weakness this year is coal volume, which hits large carriers especially hard because that is the largest cargo railroads haul.

Last year they enjoyed a brisk business in export coal demand, especially the eastern carriers hauling coal to ports to fill Europe-bound ships, but that business has fallen sharply. Meanwhile, domestic coal demand is also lighter with fewer factories powered up to make goods.

But the carload numbers have weakened recently in some other areas as well. Chemical shipments – the second-largest cargo in railcar volume -- have cooled some this month, a possible indicator of a pause in the rebound of factory activity and perhaps in line with a new round of automobile factory cuts.

Other categories linked to auto or housing industries remain weak or have weakened a bit more during May, although a few cargoes of basic construction materials show some firming.

Intermodal numbers are probably continuing to benefit from a strengthened domestic business this year, industry officials say, while ocean container traffic remains very weak as shippers face the start of the summer peak season in which they normally import boxed goods for the autumn selling season.

Contact John D. Boyd at jboyd@joc.com.