Freight Forecasting

(Photograph Courtesy of NS)

Week 25: U.S. Carloads, Intermodal Down (Again)

For the week ending June 25, 2022 (Week 25), U.S. rail traffic was 493,374 carloads and intermodal units, down 4.4% from the prior-year period, the Association of American Railroads (AAR) reported June 29. Class I railroads hauled 229,857 carloads, down 3.1%, and 263,517 containers and trailers, down 5.5%. Year-to-date, carloads were virtually flat (down 0.1%) and intermodal volume fell 3.5% compared with the same point last year.

AAR: Carloads Rise a Little, Intermodal Falls a Lot

U.S. rail traffic for the week ending June 18, 2022 (Week 24) was 501,207 carloads and intermodal units, down 2.5% compared with the same week last year. Total carloads were 232,921, up 0.4%, while U.S. intermodal volume of 268,286 containers and trailers fell 4.9%. Year-to-date, carloads improved an almost negligible 0.02%, but intermodal dropped 6.3%, compared to the prior-year period.

STB Sets 3Q22 RCAF

The Surface Transportation Board (STB) has set the third-quarter 2022 RCAF (Rail Cost Adjustment Factor), described as “an index formulated to represent changes in railroad costs incurred by the nation’s largest railroads over a specified period of time.”

(Photograph Courtesy of BNSF)

Week 22: U.S. Rail Traffic Remains Below 2021 Levels

U.S. Class I railroads hauled 475,513 carloads and intermodal units for the week ending June 4, 2022, falling 2.8% from the prior-year period. This is based on 225,274 carloads—down 1.0% from 2021—and 250,239 containers and trailers—down 4.4%, the Association of American Railroads (AAR) reported on June 8.

“The use of technology to increase shipment visibility is critical for ensuring we meet the needs and expectations of our customers who rely upon us for safe and reliable service,” said Kenny Rocker, Executive Vice President-Marketing and Sales for UP, which has joined the RailPulse coalition.

UP Joins RailPulse Coalition

RailPulse has a seventh member: Union Pacific, which on June 7 joined the coalition established in late 2020 to “develop, broaden and accelerate the use of GPS and other telematics technologies in North America’s freight rail industry.”

Rail Equipment Conference Call Takeaways: Cowen

On May 31, we held a discussion with five expert panelists who provided insights into the current state and outlook of the rail, locomotive and railcar leasing and manufacturing markets. Overall, railcar demand recovery has been driven largely by freight cars, but our panelists indicated that tank car utilization and rates are rising. If this continues and eventually leads to higher tank builds, it could be a margin tailwind for manufacturers. As for the broader railcar market, inquiries remain strong, but labor and disruptions could limit production. Locomotive upgrades remain solid.

What Sticks, What Doesn’t

A Class I railroad delivers Total Shareholder Returns (TSR) of 13.5%-14.5% assuming a stable stock market. The assumptions are 3.5%-4% price increases, 2% volume increase tied to GNP growth and expense increases held to 3% or below. With these assumptions, EPS grows by 10-10.5%, a dividend adds 1.3%, and buybacks add another 2.5% or more because of their effect on EPS. The railroad’s stock sells at a P/E of 20+. Everyone is happy, and rightfully so.