Deficit Gap Narrows For Weekly US Rail Volumes

U.S. rail traffic on a weekly basis is still lower than the same period in 2019, although that gap is narrowing, particularly for intermodal volumes.

U.S. rail volumes for the week ending June 20 totaled 457,278 carloads and intermodal units, a 12.9% decline from the same period in 2019 and a 1.8% increase from the week ending June 13, according to the Association of American Railroads.

Of that total, weekly intermodal traffic consisted of 255,455 intermodal containers, a 4.4% decrease from the same period in 2019 and a 1.8% increase sequentially. Meanwhile, weekly carload volumes slipped 21.8% to 201,823 although they rose 1.7% sequentially.

U.S. weekly carload volumes are still significantly lower amid: a 33.5% decline in coal carloads; a 36.1% decrease in metallic ores and metals carloads; a 33.2% drop in petroleum and petroleum products carloads; and a 24% dip in carloads for motor vehicles and parts. 

A comparison of coal carloads (blue), metallic ores and metals carloads (green), motor vehicles and parts carloads (orange) and petroleum and petroleum products carloads (purple) over the past year. (SONAR, using AAR data)

U.S rail volumes over the past year, as expressed in carloads (RTOTC.USA, blue line), intermodal trailers (RTOIT.CLASSI, orange line) and containers (RTOIC.CLASSI, green line). (SONAR)

The sharp decline in rail volumes for certain commodities in April due to the coronavirus pandemic affirms the data in the Federal Reserve's industrial production index, a monthly measure of the output of commodities within the industrial sector. The index, which uses 2012 as a base year with a value of 100, shows how capacity and capacity utilization fell in April for commodities such as motor vehicles and parts. 

A SONAR chart graphing the Federal Reserve's industrial production index shows a pronounced dip in April for the production of motor vehicles and parts (green), lesser declines for manufacturing production (purple) and plastics and rubber production (yellow) and petroleum and coal (blue), and a relatively flat production for paper products (orange). (SONAR)

"Total industrial production increased 1.4% in May, as many factories resumed at least partial operations following suspensions related to COVID-19. Even so, total industrial production in May was 15.4% below its pre-pandemic level in February," the Federal Reserve said on June 16. "Manufacturing output – which fell sharply in March and April – rose 3.8% in May; most major industries posted increases, with the largest gain registered by motor vehicles and parts."

A sneak peak into the second quarter?

Earlier this week, Kansas City Southern KSU said it estimates that its second-quarter 2020 revenue could be around $550 million as rail volumes took a hit from the COVID-19 pandemic in April and May. 

In comparison, second-quarter revenue in 2019 totaled $714 million, while first-quarter 2020 revenue was $731.7 million.

In a filing to the U.S. Securities and Exchange Commission, Kansas City Southern (KCS) said that automotive plant outages impacted the quarter-to-date revenue of its automotives business unit, although it is seeing sequential improvement in June as plants reopen and slowly ramp up production. KCS also said its energy business unit is under pressure from low natural gas prices denting utility coal volumes and low crude oil prices weakening crude and frac sand volumes.

But its chemicals and petroleum business unit is seeing June month-to-date refined products revenue and volumes rise year-over-year despite reduced demand at the beginning of the quarter because of sheltering in place orders. Grain volumes have also picked up slightly in June amid strong shipments of food products, KCS said.