Intermodal Volumes
Intermodal volumes ticked up sequentially in the latest week, but overall it remains within the range of around 325,000 weekly carloads that it has been in for much of the second quarter. This is better than it has been for much of the first quarter when volumes held closer to 300,000 carloads per week, but there remains a significant gap between present levels and what a historically normal level would be.
In the next few weeks, intermodal volumes could plumb the depths of volumes from earlier in the year as containers from Western Canada are caught in the ongoing work stoppage between the International Longshore and Warehouse Union Canada and terminal operators at the ports of Prince Rupert and Vancouver, British Columbia. The work stoppage ends its first full week on July 8 with no meaningful sign the sides are close to an agreement. If the strike lasts long enough, it could create a vessel backlog and resulting congestion that could impact throughput capabilities into the peak season.
The disruption comes just as rail service is moving back to its historical averages in terms of velocity, dwell time, and railcars online. Early in the second quarter, service metrics – especially velocity – took a step backward and raised the specter of ongoing service issues for the large carriers.
The weaker service metrics also caused the Surface Transportation Board to maintain enhanced service reporting at most Class I carriers through the end of the year. However, service has returned to more normal historical levels on an industrywide basis, though there are some wide variations among carriers. Recently, railcars online have fallen, suggesting that shippers are confident enough in the improvements that they are willing to remove equipment from the North American rail system.
Carload Volumes
Carload volumes declined as weakness in coal and petroleum volumes offset gains in crushed stone and other areas. Coal volumes over the last two weeks could be starting the long-expected secular decline as weak natural gas prices challenge coal’s domestic economics for electricity consumption.
Petroleum volumes have also declined noticeably in the last two weeks, and are now at the low end of their post-pandemic range. Economically-sensitive freight is moving slightly higher in the last few weeks as most non-bulk and energy-related sectors are holding steady or gaining slightly.
