US rail volumes trend lower amid trade tailwinds

A photograph of a train traveling on rail track. There is snow on the ground.

U.S. rail traffic continued to inch downward for the first two weeks of 2020 amid trade tailwinds.

Year-to-date U.S. rail volumes for the week ending Saturday totaled 915,638 carloads and intermodal units, a 7.6% drop from the same period in 2019, according to the Association of American Railroads. Of that total, U.S. carloads slipped 6.8% to 454,683 carloads, while U.S. intermodal units fell 8.4% to 460,955 intermodal containers and trailers. 

A chart showing how U.S. rail carloads have trended through 2019.
U.S. rail carloads in 2019. Source: SONAR Surf

Meanwhile, North American rail traffic year to date slipped 6.4% to 1.26 million carloads and intermodal units. North American carloads were down 6.1% to 642,646 carloads, while North American intermodal units were down 6.6% to 616,989 intermodal units.

The continued declines in North American rail volumes come as rail industry stakeholders are starting to see some resolution regarding U.S. trade relations, which could ease trade uncertainties as the year progresses. Although the free trade agreement between the U.S., Canada and Mexico still needs to be ratified by all countries, the U.S. and China meanwhile signed Phase One of a trade agreement Wednesday. While the agreement doesn’t remove all the tariffs, the agreement kicks off discussions concerning agriculture, intellectual property and technology transfers.

This week Class I railroads CSX (NASDAQ: CSX) and Kansas City Southern (NYSE: KSU) will report their fourth-quarter earnings, while Union Pacific (NYSE: UNP) and rail equipment manufacturer GATX (NYSE: GATX) will release their quarterly results next week. All four companies are expected to provide some sales guidance for the year.