Rail/Carloads
Carload freight volumes ticked up in the latest week with the strength powered by growth in economically sensitive freight traffic. This is a short-term and long-term positive for the railroads and their shippers because these are the commodity groups that will drive carload growth for the rest of this year and into the future.
Coal moved up in the latest week and ended the week nearly flat with last year’s result in the latest week. It is not expected that coal will showcase the typical third-quarter move-up in volumes that is typically seen. Natural gas prices are at a rate that does not support additional coal-fired electricity generation even as some Powder River basin-generating territories like Texas face strong demand from high summer temperatures.
Grain volumes declined in the latest week, back to their July 4 holiday levels on weak inventory levels. These weak inventory levels are expected to hold back volumes through at least the end of the third quarter when the new harvest begins.
On the positive side of the ledger, crushed stone, sand, and gravel volumes remain well above their historical average even with a slight decline in the latest week. Automotive volumes have also been a bright spot for economically sensitive freight categories as they have shown a much stronger path out of the July 4 holiday than is typically seen, as manufacturers respond to the strong pent-up demand for vehicles and still-depleted inventories.
Intermodal
Intermodal volumes were nearly steady in the latest week, as they dodged the effects of a possible UPS strike but lacked any real catalyst to move volumes higher. There is not expected to be any real peak season in the third and fourth quarters this year, which will make comparisons harder as the year progresses for intermodal volumes.
The competitive situation relative to trucking is tough as active truck utilization remains below historical averages. Intermodal’s competitive stance likely won’t recover before the middle to later part of next year, which means intermodal volume headwinds are likely to persist for at least another year.
