U.S. rail volumes are still lower compared to last year, although that gap narrowed last week.
The U.S. freight railroads originated 521,956 carloads and intermodal units for the week ending Sept. 19, according to the Association of American Railroads (AAR). This is 1.3% lower than the same period in 2019.
Intermodal traffic helped lift the overall total, with volumes up 6.3% to 295,269 intermodal containers and trailers. But carloads are still down compared with a year ago.
Weekly U.S. carloads totaled 226,687, which is 9.6% lower than last year. Although coal carloads slipped 22% to 61,456 carloads and nonmetallic minerals fell 16.4% to 30,609 carloads, grain carloads were up 16% to 22,130, carloads of motor vehicles and parts were up 9.6% to 17,610 and carloads of farm products were up 5% to 15,471.
On a year-to-date basis, U.S. rail volumes totaled nearly 17.6 million carloads and intermodal units, which is 10.9% lower than the same period in 2019.
Market conditions influencing rail volumes
The increase in U.S. intermodal traffic is partly attributable to market tightness at West Coast ports, where congestion is pushing peak season surcharge rates higher, FreightWaves reported.
“Due to the record volume at the LA ports, there is a greater imbalance than usual, with too many containers going eastbound and not enough loaded containers going back westbound, so rates are high to discourage more eastbound moves and low to encourage more westbound moves,” said Mike Baudendistel, FreightWaves’ intermodal and rail market expert, in Saturday’s article.
Furthermore, as intermodal volumes grow, service issues have the potential to crop up, even though terminal dwell and train velocity appear to be improving, according to a Wednesday FreightWaves Passport note.
Meanwhile, e-commerce will likely benefit as the winter holiday season and colder weather approach, which in turn could boost intermodal traffic.
Housing sales also could help to support rail volumes since new homeowners need to furnish their homes.
Sales of newly built, single-family homes rose by 4.8% between July and August to a seasonally adjusted annual rate of 1.01 million units, according to data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
August sales were at their highest pace since September 2006, and the August rate is 43.2% higher than August 2019, said the National Association of Home Builders (NAHB).
But despite the increase, builders are concerned about the availability of and access to building materials. Uncertainty over how much labor might be available is another issue.
“Surging sales are consistent with record builder confidence levels stemming from higher buyer traffic, historically low interest rates and a shift in demand for lower density markets,” said NAHB Chairman Chuck Fowke, a custom home builder from Tampa, Florida. “However, higher lumber costs and limited building material availability in some markets signify we could see higher prices down the road.”
Robert Dietz, NAHB’s chief economist, said, “New home sales are now 15% higher on a year-to-date basis, with gains in all regions. But with inventory at just a 3.3 months’ supply, more construction is needed. The challenge will be whether materials and labor are available.”
Click here for more FreightWaves articles by Joanna Marsh.
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