Rail/Intermodal
Carload volumes were nearly steady overall in the latest week on a sequential basis. This is in line with an overall stable, slow-growth economic picture. Economically sensitive freight declined slightly on a sequential basis and chemicals and pulp and paper showed weakness.
Chemicals traffic is declining in the last few weeks, moving below 202 and five-year average levels after largely holding steady with 2022 for the first quarter and a half of the year. The chemicals weakness is a potentially troubling sign for the overall economy because of how many manufacturing and industrial processes are supported by chemicals produced in the sector.
Pulp and paper volumes have been weak for the last several quarters and took another step down in the last few weeks coming out of the Memorial Day holiday. The sector appears unlikely to recover in the near term.
Intermodal volumes bounced back in the latest week as the industry gained clarity around the status of the west coast port labor negotiations. Wildcat job actions increased up and down the coast in recent weeks and led to concerns that cargo flow could come to an outright halt before a tentative six-year agreement was reached last week.
The agreement ensures labor peace between the International Longshore and Warehouse Union and the Pacific Maritime Association that work at and own the terminals at U.S. west coast ports. Attention will now turn north of the border where earlier this month ILWU Canada authorized a strike against the terminals at the ports of Prince Rupert and Vancouver, British Columbia. It is hoped and expected that the U.S. agreement could provide a pattern for a deal to be reached north of the border. The focus then will shift to the east and Gulf Coast ports, which is set to see a contract expiration in September 2024.
East Palestine Derailment
This week, the National Transportation Safety Board held a two-day hearing about February’s Norfolk Southern derailment in East Palestine, Ohio. The hearing focused on emergency response and the decision to vent the tank cars on the first day before shifting to tank car safety and wheel bearing detector systems on the hearing’s second day.
It remains to be seen what, if any, recommendations are made by the agency in its final accident report or what regulations might be amended by the Federal Railroad Administration or enacted by Congress because of the accident.
