US rail traffic slumps again

A photograph showing two rows of tank cars and two rows of empty railcars.

Year-to-date U.S. rail volumes tumbled 4.8% as macroeconomic uncertainty weighs on rail traffic.

Rail volumes so far this year totaled 25.3 million carloads and intermodal units for the week ending Dec. 7, according to the Association of American Railroads (AAR). Of that total, U.S. carloads slipped 4.6% to 12.3 million while U.S. intermodal units fell 4.9% to 13 million containers and trailers.

A graph showing the total number of U.S. carloads each month between December 2018 and December 2019. The graph has a line that shows carload totals each month.
Economic uncertainty weighs on rail volumes. Source: SONAR Surf

Meanwhile, overall North American rail volumes year-to-date were down 3.7% to nearly 34.6 million carloads and intermodal units among the 12 railroads that report data to AAR. Canadian railroads hauled 0.3% fewer carloads and intermodal units, at 7.4 million units year-to-date, while Mexican railroads hauled 2.8% fewer carloads and intermodal units, at nearly 1.9 million year-to-date.

The decline in rail volumes in 2019 can be attributed to a number of factors, including softness in the U.S. industrial economy, brought on in part by trade uncertainties, AAR said last week.

This week, though, brought about hopes within the industry and among shippers that some trade resolution might be at hand, at least among the U.S., Canada and Mexico. President Donald Trump and U.S. House of Representatives leadership have indicated that Congress could soon ratify the U.S.-Mexico-Canada Agreement (USMCA), a trade agreement that will replace the North American Free Trade Agreement (NAFTA).

“As the backbone of the North American supply chain, freight railroads applaud today’s announcement, which provides much-needed certainty with our two largest trading partners,” AAR CEO Ian Jefferies said Dec. 10. “Congress should move with haste to ratify USMCA before the end of the year and provide an economic shot in the arm to U.S. businesses.”

AAR has estimated that intermodal trade accounts for 42% of U.S. freight railroads’ carloads and intermodal units, with more than 35% of rail revenue directly associated with international trade.

“Retailers are very encouraged by this positive step forward to approve the USMCA, which will provide key updates to the landmark North American Free Trade Agreement and promote long-term economic growth. The USMCA takes many important steps to modernize the agreement to reflect today’s global and digital economy,” said National Retail Federation CEO Matthew Shay. “This agreement could not come at a better time and provides certainty for U.S. retailers that rely on the North American market, including those that operate in Canada and Mexico.”