Railroad Employment
Railroad employment data shows that carriers are in fact operating true to statements on recent earnings calls that they are slowing the pace of hiring programs. In July, only two carriers showed substantial increases in headcount while all the rest were either stable or lower on a sequential basis.
Those two carriers’ headcount gains were not enough to offset the losses elsewhere even though they were modest at all but one western carrier. It will be interesting as harvest season ramps up and the carriers cope with weather-related disruptions caused by Tropical Storms, what effect that will have on their service levels and performance?
Surface Transportation Board
The U.S. Surface Transportation Board issued a statement that it was actively monitoring service levels after Tropical Storm Hilary created flooding and debris flows in Southern California.
Union Pacific announced this week, a two-day suspension of all domestic intermodal origin traffic from several Los Angeles-area ramp locations to Chicago and for interchange to eastern carriers as it copes with damage on its main intermodal route. UP opened one track this week, but full capacity will likely be delayed for several weeks because of bridge damage on one of the main lines of its Sunset route between Los Angeles, California, and Yuma, Arizona. It will be imperative for carriers to not let service deteriorate in the wake of slowing hiring and weather-related disruptions if they desire to keep the STB at bay.\
Carload Traffic
Carload traffic moved up in the latest week on a sequential basis, but that gain was nearly all the result of a surge in traffic in non-metallic minerals on one specific carrier. It is likely that at least some of the surge is related to the carrier catching up on export shipments that were delayed when Western Canadian ports were shut down by a labor strike last month. When the ports reopened it is possible that intermodal and grain shipments moved while Potash waited for the backlog to subside and moved in the latest week for which there is data. It also suggests that the strong gain in non-metallic minerals shipments in the latest week’s figures may not be sustainable in future weeks.
Intermodal
Intermodal volumes barely moved in the latest week, holding at weak levels that are below prior-year and five-year average levels. The flat result comes during the seasonal peak season for intermodal shipments and when volumes have historically moved stronger. There is no sign of a peak season this year so year-over-year comparisons will get progressively more difficult over the next several weeks. This is not entirely unexpected given the competitive situation of intermodal relative to the truckload market and weaker imports, but it nonetheless pressures intermodal volumes over the next several quarters.
