U.S. rail traffic in May sharply rebounded from the coronavirus pandemic-induced volume trough of last year, according to data from the Association of American Railroads (AAR).
Rail volumes for May totaled nearly 2.12 million carloads and intermodal units, a 28% increase from May 2020. Of that, U.S. railroads originated 964,356 carloads, which was 30.4% higher than a year ago, while intermodal units rose 1.15 million containers and trailers, up 26.2%.
Total carloads in May were the most for any month since October 2019 on a weekly average basis, said AAR Senior Vice President John T. Gray. He also said intermodal volumes between January and May represented the best period ever for U.S. railroads for that time frame.
For the first five months of the year, U.S. carload volumes were up 7.3% to 4.83 million carloads, while intermodal traffic gained 19.2% year-over-year to 957,198 units.
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“Railroads hope to build on these gains in the months ahead as they help the economy return to strong, sustainable growth,” Gray said.
Meanwhile, on a weekly and sequential basis, U.S. rail volumes were flat to higher, rising 0.3% to 530,225 carloads and intermodal units.
It’s summertime but there’s still congestion
With more businesses returning to normal and vaccinations continuing, consumer activity will likely remain elevated amid anticipated increases in foot traffic at retailers and restaurants. This could continue to lend support to North American intermodal volumes for the remainder of this year.
On the flip side, the supply chain across multiple transportation modes will continue to face intense pressure through 2021 as demand for goods and services grows amid capacity constraints.
Rail observers expect the backlog of containers at the ports of Los Angeles and Long Beach to persist through the year. Although terminal fluidity and cycle times at busy U.S. ports are improving, the supply chain still needs better chassis utilization and more warehouse capacity to keep goods moving. Meanwhile, the Logistics Managers Index noted continued tightness in transportation capacity in May.
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Compounding the situation is a labor shortage not just for truckers, but also at the ports and for transportation-related manufacturing.
The container market is seeing exorbitant charter rates — as high as $135,000 per day — while Oakland has topped LA and Long Beach as the most congested U.S. West Coast port. But all three ports were still seeing offshore vessels waiting to dock as of last week, according to American Shipper.
While the current freight markets are extraordinary in many ways, questions regarding the sustainability of current freight demand levels remain as consumers allocate more spending to travel and services.
“Following stockouts and the numerous transportation capacity constraints that have taken place throughout the past year, many shippers have taken steps to get imported goods into North America quickly to avoid the fall rush,” said Mike Baudendistel, FreightWaves market expert for rail and intermodal. “As a result, we have seen elevated import volume in the late spring that is normally only associated with the fall peak shipping season.”
He continued, “The current import volume seems certain to keep domestic freight demand elevated near term, but it remains to be seen if that pull-forward results in a falloff in demand closer to the end of the year.”
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