Traffic Perks for Large U.S. Railroads

Freight traffic at major U.S. railroads showed real strength at mid-July, as total volume was the highest since early spring and train hauls of scrap materials – an indicator of factory demand for inputs – were the highest so far this year.

All of that was a marked change from the past month, when traffic levels weakened and then rebounded slowly from the July 4 holiday period.

The latest traffic level is still down by 17.9 percent from a year ago for bulk carloads and down 18.8 percent for intermodal trailers and containers. But the numbers are the highest that Class I U.S. railroads and a few large regionals have reported in months to the Association of American Railroads.

The U.S. lines had 268,553 carloads in the week ending July 18, more than any time since March 21. Intermodal boxes carried aboard trains, at 189,541 units, were the most since Feb 14.

Within carloads, large U.S. carriers hauled more than 27,000 tank cars for just the second time since May. And the 8,202 cars of scrap and waste materials the railroads reported – mostly metal-filled gondolas headed for recycling – was sharply higher than in recent weeks as it set a 2009 peak.

Higher chemical and scrap loadings reflect percolating demand by factories, just as weakness in those freight hauls takes place when factory demand is low.

The rail traffic is consistent with other recent signs that the industrial sector may be ready to ratchet up activity some, especially as auto plants start to reopen after long retooling shutdowns now that General Motors and Chrysler have both come out of bankruptcy.

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