Rail Volumes & Intermodal
Rail volumes over the last few weeks have been largely the status quo for freight in a slow-growth economy. As the economy slowly grows, so does overall carload freight. Carload volumes have flatlined on an absolute basis in the latest week but continue to post low single-digit volume growth compared with 2022 in the last few weeks.
Coal volumes have been steady at around 72,000 carloads per week during the spring shoulder season while grain traffic has declined significantly over the last month. It is expected to stabilize into the second quarter but so far that has not occurred.
Chemicals traffic so far has closely followed the trajectory of 2022’s traffic levels, which will need to change in the second half of the year if the economy remains stable. Crushed stone, sand, and gravel traffic which had been a bright spot moved down in the latest week and will be watched closely in the weeks ahead to understand if demand is slowing or if it is a one-week blip.
Intermodal volumes – while increasing on a sequential basis in the latest week – remain well below 2022 levels and historical averages. There appears to be no easy solution for intermodal’s volume woes as the competing truckload market remains an aggressive competitor. Intermodal volumes are nearly 10% below 2022 levels and have shown only modest improvement.
Surface Transportation Board (STB)
The Surface Transportation Board remains active and engaged on regulatory matters with its chairman telling the North American Rail Shippers Association meeting this week that carrier policies and procedures are encouraging the agency and others in Washington to look at additional regulatory remedies to level the playing field between rail carriers and their shippers.
The agency has already enacted final offer rate review standards and is expected to announce reciprocal switching rules later this year. Chairman Martin Oberman told a shippers group earlier this year that he would like to have a decision on the reciprocal switching proceeding issued by the end of the year. The decision was originally expected to be issued by the end of 2022, but that timeline slipped as the agency was dealing with the Canadian Pacific-Kansas City Southern merger application.
