Rail/Intermodal
Intermodal and rail carload volumes recovered strongly from their Easter-inducted decline during the prior week. North American loadings had dipped during Easter week primarily due to Mexico, and volume bounced back to the levels prior to the holiday.
Two notable sectors that did not rebound to pre-holiday levels are coal and pulp/paper. Coal bounced back ever so slightly in the post-holiday week but got nowhere near where it had been running prior to the holiday. Coal is unlikely to achieve those levels in the weeks and quarters ahead as coal faces economic and structural headwinds that will push its loadings weaker. Pulp and paper volumes also did not improve after the holiday dip as it faces mill closures and other headwinds that could keep traffic levels depressed.
Intermodal volumes – though bouncing back to pre-Easter levels in the last week – face a long path back to normalcy as they hover around 300.000 carloads on a weekly basis. Intermodal competitiveness relative to trucking is expected to be challenged through 2024, which will make it hard for railroads to regain market share. Another contributor to intermodal’s woes is the ongoing labor strife at west coast ports that shows no signs of abating.
Rail Employment
The rail industry as a whole increased the number of operating personnel in March compared with the prior month. That performance normally would be interpreted as good news given the focus on hiring as a way to resolve the last few years of service issues. However, the gains were not evenly distributed among the carriers.
Some large carriers across regions saw a pullback in their number of operating personnel, which suggests that some carriers either are unable to either retain recently hired personnel or have pulled back the reins on their hiring programs. The latter alternative could indicate that those carriers expect a recession or economic slowdown. So far, service levels have maintained recent gains, but the March employment figures represent at least a warning that changes could be coming.
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