Rail/Intermodal
Carload and intermodal volumes are settling into a status quo posture after the July 4 holiday. Carload volumes have bounced back in recent weeks to where they were before the summer holiday and have held nearly flat since then. Slow growth and economic uncertainties are keeping additional freight growth in carload on the sidelines as gains in some groupings are offset by losses in other areas.
Intermodal volumes bounced back in the latest week after navigating weakness brought on by the double whammy of the holiday and the dockworker strike at Western Canadian ports. With those issues resolved, intermodal volumes have returned to their late June levels, but those levels are well below comparable 2022 and five-year average periods.
A normal peak season is not anticipated this year, so volumes are not expected to rise much beyond present levels. The traditional peak season has waned in recent years in importance, but this year it is expected to be completely non-existent as economic concerns and lower imports combine with port shifts to mute its impact.
Carriers on recent earnings calls have been very candid about the potential for economic weakness to weigh on volumes over the course of the second half of 2023. They generally have expressed some level of reservation about the economy but believe that service improvements will leave them well-positioned to capture growth when the economy allows it to occur.
Most carriers reduced their estimates for volumes and revenues over the next few quarters until they gain more clarity on what the economic demand from their customers will be. Against that backdrop, most carriers also announced plans to scale back or stop entirely their hiring and training programs.
Heading into the fall harvest, those slowing headcount additions will be tested as the carriers deal with the annual bump in agricultural traffic levels. While it remains to be seen how robust the harvest will be, recent rains in key growing regions provided some hope for an average to above-average year.
Surface Transportation Board (STB)
The Surface Transportation Board will host a meeting of its Grain Car Council on August 15 in Kansas City from 1 to 5 p.m. Central ahead of the harvest season to get a sense of service levels and car supply. Interested industry participants can watch the meeting online if they cannot attend in person. The board remains actively engaged on service issues even as recent metrics have shown improvement with most of the carriers still under some form of enhanced reporting requirement.
