Rail/Intermodal
Intermodal volumes bounced back from their Lunar New Year lull in the latest week but did not bounce back to levels greater than they had been running at previously. Volumes remain weak, well below 2022 and five-year average levels. The year-over-year comparisons will ease significantly in the second half of the year, but the confluence of factors pressuring volume levels are unlikely to calm down in a similar timeframe.
There remains no timeline for resolution of the west coast port labor contract, and there has been a ramping up of potentially cargo-disrupting activity in recent weeks. This will complicate cargo return to the west coast ports until there is a resolution to the dispute.
Lower overall import levels and a shift of imports that remain toward east and U.S. Gulf coast ports improve trucking’s competitive position, allowing freight to bypass rail intermodal entirely. This is especially true in times of falling diesel prices and lower active truck utilization.
In rail carload, volumes bounced back on a sequential basis in the latest week to mostly stronger levels across most of the commodity groups. However, they essentially retained the overall trajectory of moving at a rate slightly above 2022 levels, but below the five-year average.
One positive development for carload shippers and carriers is the fact that economically sensitive freight – volume excluding coal, petroleum, and agricultural products – is performing better than overall carload volume levels. This is a good sign because it is the economically sensitive freight commodities that will ultimately drive carload growth in 2023 and beyond for the railroads.
Regulatory Environment
Uncertainty continues to dominate the industry about any regulatory or legislative response to last month’s fiery derailment in East Palestine, Ohio. The Department of Transportation has discussed many potential changes and urged Congressional leaders to make some changes, but so far no concrete actions have materialized.
Three different rail safety bills currently are marinating in Congress, but it remains unclear which, if any, might move forward. This has placed shippers and lessors in a holding pattern until they know what the regulatory or legislative changes might be.
CSX chief executive Joe Hinrichs told the Southwest Association of Rail Shippers conference in San Antonio, Texas, this week that he expected the existing 2029 phaseout date for DOT-111 tank cars carrying flammable liquids to be brought forward. But it is unclear if he thinks it will be brought forward to 2025 to harmonize with the Canadian phase-out date or to another period between 2025 and 2029.
See how your organization can capitalize on the power of actionable intelligence by clicking below:
