Weekly US Rail Traffic Falls On Holiday Comps

Weekly U.S. rail traffic slipped nearly 10% in a week that was shorter than usual because of Labor Day.

U.S. rail volumes for the week ending Saturday totaled 474,785 carloads and intermodal units, a 9.9% drop compared with the same period in 2019, according to the Association of American Railroads. Labor Day was Sept. 7. 

Intermodal traffic was lower amid the holiday weekend, breaking the upward trend of the last few weeks. Weekly U.S. intermodal volumes slipped 5% to 260,643 containers and trailers. Meanwhile, U.S. carloads totaled 214,142, down 15.2% from a year ago.

Year-to-date U.S. traffic totaled 17 million carloads and intermodal units, which is 11.2% lower than last year.

U.S. rail volumes over the past year. This chart shows carloads (in blue: RTOTC.USA), intermodal trailers (in orange: RTOIT.CLASSI) and intermodal containers (in green: RTOIC.CLASS). (SONAR)

Despite weekly dip last week, US intermodal volumes still poised to trend higher

A number of factors support the possibility that rail volumes could continue their upward trend for some commodities through the end of the year. Grain shippers are anticipating a strong export market, while consumer spending ahead of the winter holiday season could provide some support for intermodal movements in the third and fourth quarters.

"Container imports into the West Coast were exceptionally strong in July and August, trucking capacity remains very tight and consumer freight demand should strengthen into the fourth quarter," said a Wednesday research note from FreightWaves Passport.

The note observed that train velocity has slowed in recent weeks, which could translate into network capacity nearing its limits in some regions.

"Average intermodal train speeds are slowing: The blended average speed for Class I intermodal trains is just over 30 mph, its lowest level of 2020. At this point, we don't expect meaningful improvements in capacity availability or network fluidity this year," the note continued.

Meanwhile, the impact of the COVID-19 pandemic could factor into how rail volumes perform as fall approaches. E-commerce has helped to support consumer spending numbers, but many businesses are still operating under capacity as social distancing restrictions remain.

"Retail spending habits have remained largely consistent and stable these past few months since stores began to reopen. Some consumers likely reduced their spending with the end of the $600 supplemental unemployment benefits for those out of work, but a building up of savings from that and other government cash helped support spending," said National Retail Federation Chief Economist Jack Kleinhenz. 

Kleinherz was reacting to figures from the U.S. Census Bureau that determined that consumer spending was up 0.6% on a seasonally adjusted basis from July and up 2.6% year-over-year. August's figure contrasts with the 0.9% month-over-month increase seen in July. 

He continued, "At this juncture, it is difficult to sort out how much economic activity is due to government support and how much is evidence of hardcore demand due to recent job gains. August numbers might have been higher if not for small businesses struggling with reopening and the return to full operations."

Union Pacific celebrates New York Stock Exchange presence for 150 years

Although e-commerce has the potential to modify supply chains and near-term events such as the COVID-19 pandemic cause manufacturers to reconsider their sourcing options, Union Pacific UNP celebration on being listed on the New York Stock Exchange for 150 years reminds stakeholders and the broader public of the longevity of freight railroads in North America. 

UP celebrated the anniversary by virtually ringing the closing bell Tuesday.

The company said it traded initially at less than $27 per share. Since then, it has undergone seven stock splits and paid dividends on common stock for 121 consecutive years. UP closed Wednesday at $201.42 per share.

"It is an honor to celebrate this historic milestone and the company's ascension to the longest-listed transportation company and largest railroad traded on the New York Stock Exchange with the financial community and our dedicated employees," said UP President and CEO Lance Fritz, who led the virtual ringing. "Their relentless focus on our customers is transforming Union Pacific more than 150 years after President Abraham Lincoln founded our company."

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