Rails Jolted by May Slump

Top U.S. railroads got off to a bad start in the first full week of May, as bulk carloads as well as intermodal hauls worsened both from a year ago and from recent levels this spring, according to a report from the Association of American Railroads.

The report shows a new level of erosion in freight demand, in line with yesterday’s government report showing that retail sales have been weaker than expected in recent months.

The U.S. carriers originated just 249,576 carloads in the week ending May 9 of commodities, construction materials and the types of factory goods and equipment that can ride in railcars. That is down 25.8 percent from the same week last year, from 253,573 loads in the May 2 week and is the lowest level since February.

AAR, which compiles the data from Class I railroads and a few large regionals, said the downturn is not hitting railroads equally as carloads were down 21.4 percent in the West and 31.7 percent in the East.

The big rail lines picked up 181,662 intermodal trailers or containers, which at 21 percent below the year-earlier week marked a new decline in the box traffic that had been slowly regaining strength. A week earlier, they hauled 187,203 loads, and intermodal has not been so low since mid-March when a wave of heavy storms and floods disrupted shipments.

For the first 18 weeks of 2009, U.S. railroads reported cumulative volume of 4,789,321 carloads, down 18.8 percent from 2008. Intermodal totaled 3,343,134 trailers or containers, down 16.5 percent. By ton-miles, total rail volume is down 17.7 percent.

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