Rail/Intermodal
North American rail carload declined sequentially in the latest week, but intermodal traffic was up slightly. On a percentage basis, the largest decreases week-over-week were in metallic ores, primary forecast products, and grain. The largest increases were in farm products and stone, clay, and glass.
Through the first nine weeks of the year, carload traffic is down 4.3% versus the same 2023 period. As has been the case for much of the year, only two carload commodity groups – chemicals and petroleum/petroleum products – are running above comparable 2023 levels on a cumulative basis.
Overall rail traffic is up just under 1% y/y on a cumulative basis largely on the strength of intermodal. Through the first nine weeks of 2024, intermodal traffic is up 6.5% y/y and tracking just above the five-year average.
The small intermodal trailer segment outperformed containers sequentially in the latest week, but container volume was up nearly 13% y/y in the latest week while trailer volume was down more than 25%.
Activist Investors
In a late addition to the program, Surface Transportation Board Chairman Martin Oberman used his February 29 speech at the Southeast Association of Rail Shippers spring meeting to lash out at activist investor meddling in management decisions at Norfolk Southern as well as at the activist investor-led management changes at Union Pacific last year.
Oberman declared that the proxy fight for control of NS “does not bode well for the railroad industry, the U.S. economy, or the public.” He termed Ancora Holdings’ plans as “a broadside attack on NS and its corporate philosophy of maintaining its workforce at resilient levels and investing for long-term growth.”
The speech focused principally on the problems Oberman sees as being created by investors’ focus on operating ratio at the exclusion of other priorities he deemed to be essential for monopoly railroads. Oberman only briefly touched on possible countermeasures, one being the proposed reciprocal switching rule under STB review as a final rule.
“And the board has also stated it is interested in considering additional ways to grant sole-served shippers competitive access to a second railroad,” Oberman said. “In my view, for example, it may well be time for the STB to re-examine the restrictions contained in the decades-old bottleneck rule.”
Oberman’s tenure as a board member technically expired at the end of 2023, but he continues to serve as STB chairman under a holdover arrangement that could last as long as one year.
