Intermodal Volumes Prop Up US Rail Traffic

U.S. intermodal traffic on a weekly basis gained 5% in the week ending Aug. 22, which in turn helped lift overall rail volumes higher.

U.S. freight railroads originated 285,086 intermodal containers and trailers last week, a 5% increase from the same period in 2019, according to the Association of American Railroads. Volumes are also 2.5% higher sequentially, and last week was the third week in a row that weekly traffic was higher on a year-over-year basis.

But U.S. weekly carloads are still lower compared with last year, at 229,828 carloads. That is a 12% decline from a year ago. On a sequential basis, carloads were 3.4% higher. 

Combined U.S. rail traffic on a weekly basis was 514,914 carloads and intermodal units, a 3.3% drop compared with the same period last year.

Meanwhile, year-to-date U.S. rail volumes totaled 15.55 million carloads and intermodal units, a 11.9% decline from the same period in 2019. 

New home sales up, but Laura looms

Although the U.S. is still facing some macroeconomic uncertainty because of the coronavirus pandemic, one figure that could bode well for rail volumes is the strength of single-family home sales.

The U.S. Department of Housing and Urban Development and the U.S. Census Bureau on Tuesday reported that sales of newly built, single-family homes was up 13.9% in July to a seasonally adjusted annual rate of 901,000 units. That's the highest rate increase since 2006.

According to the National Association of Home Builders (NAHB), the July rate is 36.3% higher than July 2019. 

"New home sales are benefiting from the suburban shift, as prospective buyers seek out affordable markets in order to obtain more residential space. Moreover, sales are increasingly coming from homes that have not started construction, with that count up 34% year-over-year," said NAHB chief economist Robert Dietz. "In contrast, sales of completed, ready-to-occupy homes are down almost 24%. These measures point to continued gains for single-family construction ahead."

While a trend in higher new home sales could benefit rail volumes, Hurricane Laura, which started out as a tropical storm but has since been upgraded to a Category 4 hurricane, could disrupt the rail network in the short term. 

Details change every day, but as of Wednesday, the railroads said they were continuing to monitor the storm and are diverting traffic as needed.

In a Wednesday operations update, Norfolk Southern Corporation NSC said it "will continue to watch the progress of the storm and has staged equipment and materials in key areas to begin any necessary recovery activities as soon as it is safe to do so."

In an earlier update on Wednesday, Norfolk Southern said it had resumed normal operations in the Mobile, Alabama, area. 

NS' service updates can be found here.

BNSF, owned by Berkshire Hathaway, Inc. BRK said the hurricane could cause extended service outages in the area because of the forecasted storm surge as well as the potential for flooding in multiple locations, according to a Wednesday operations note.

With the flood gates in and around New Orleans closed, interchange traffic with BNSF's eastern carriers has been affected and efforts are being made to re-route traffic, BNSF said.

"Throughout the week, BNSF has been preparing for the hurricane, including the activation of an around-the-clock Command Center to address any impacts to our network and direct recovery efforts that are needed," BNSF said."Additional resources have been staged at various locations to address track outages as quickly as possible. Our operating teams are also in communication with local, state and federal emergency personnel."

BNSF's service updates can be found here. 

Kansas City Southern KSU noted that Lake Charles, Louisiana, and Port Arthur, Texas, went under mandatory evacuations because of Hurricane Laura in a Tuesday operations update. 

Union Pacific Corporation UNP "has informed us that they have begun taking the necessary precautions and therefore our routes between Beaumont and Houston will not be in service after 7 p.m." Tuesday, Kansas City Southern (KCS) said. "This will impact both north and southbound cross-border service." 

The latest KCS update can be found here.

Union Pacific (UP) confirmed that it was curtailing operations across parts of its network, according to a Tuesday operations update. The railroad was securing rail equipment at its yards and deploying additional support personnel. 

UP's intermodal terminal in Avondale, Louisiana, remains closed until further notice, and it also closed the Settegast and Englewood intermodal terminals in Houston on Tuesday. 

UP's updates can be found here. 

Separately, UP also said it was consolidating its intermodal operations in the Houston area this fall as part of its broader efforts to implement its version of precision scheduled railroading. 

At the Settegast facility, UP will continue to handle its current intermodal and manifest business and it will take on the intermodal shipments currently managed by the Englewood yard, according to a Wednesday announcement from Kenny Rocker, UP's executive vice president for marketing and sales. The Englewood facility will then have additional capacity for UP's manifest operations. 

The changes will simplify ramp operations, Rocker said.

"This shift will further improve the network fluidity in the Houston area, providing you with safer and more consistent service – a major win for all customers," Rocker said.

Click here for more FreightWaves articles by Joanna Marsh.

Related articles:

Truck stops close shop ahead of Hurricane Laura

US intermodal traffic higher for second consecutive week

Sales pop, inventories drop for essential retail; trucking the beneficiary