US rail volumes still sluggish

The slump in U.S. rail volumes is persisting three weeks into the new year.

U.S. rail traffic year-to-date totaled nearly 1.42 million carloads and intermodal units for the week ending Jan. 18, a 7.8% drop compared with the same period in 2019, according to the Association of American Railroads. U.S. rail operations originated 7.4% fewer carloads, at 692,077, while U.S. intermodal units fell 8.1% to 723,293 intermodal containers and trailers.

Overall North American rail volumes year-to-date were 7.2% lower at 1.93 million carloads and intermodal units. Canadian rail traffic slipped 7.2% to 412,161 carloads and intermodal units, while Mexican rail volume was up 0.4% to 102,545 carloads and intermodal units.

This chart shows the gradual decline in U.S. rail carloads over 2019 and compares it to volume declines in intermodal containers and trailers among the Class I railroads. Source: SONAR Surf (RTOTC.USA – Total U.S. carloads; RTOIT.CLASSI – Total Class I intermodal trailers; RTOIC.CLASSI – Total Class I intermodal containers)

Wednesday’s weekly data release comes as the Class I railroads have started to share their expectations for rail volumes in 2020.

Last week, CSX (NASDAQ: CSX) said it expects its merchandise volumes to grow in 2020, with volumes “stronger” in the second half of the year than in the first. Merchandise volumes consist of commodities such as agricultural products, minerals, auto parts and chemicals. CSX also said it anticipates intermodal volumes to “do well” in 2020, including for the first half of the year, now that the railroad has completed rationalizing its lanes.

Meanwhile, Kansas City Southern (NYSE: KSU) said it expects rail volumes and revenue to grow in 2020 amid service improvements and clarity on U.S. trade policy concerning North America.