For the week ending Sept. 26, 2020, total U.S. weekly rail traffic was 518,290 carloads and intermodal units, down 2.1% compared with the same week last year. Total carloads for the week, at 224,146 carloads and down 10.5% compared with the same week in 2019, were offset by U.S. weekly intermodal volume, at 294,144 containers and trailers, up 5.5% compared to 2019.
Railroads are fundamentally directly involved in heavy manufacturing, resource commodities, energy and industrial production. Not so much e-commerce—at least not as direct movers and organizers. With that in mind, let’s examine how the railroad merchandise carload traffic pattern looks more than halfway through the third quarter of 2020.
Intermodal gains mostly offset carload declines for U.S. and North American freight rail traffic for the week ending Sept. 19, 2020, reducing the weekly decline to less than 2%, the Association of American Railroads (AAR) reported on Sept. 23. Traffic for the year’s first 38 weeks was still down significantly compared to 2019, however.
In the two weeks following Cowen and Company’s mid-September Transportation and Sustainable Mobility Conference, analyst Matt Elkott, with input from colleagues Adam Kramer and Jason Seidl (Managing Director and Railway Age Wall Street Contributing Editor), noted that railcar inquiries “have ticked up. While translation into orders may not yet be commensurate with inquiries due to election and pandemic uncertainty, there appears to be an improvement in underlying demand” that should carry forward into a recovery in 2021.
RAILWAY AGE, SEPTEMBER 2020 ISSUE: The average freight railroad conducts thousands of interline settlements representing a significant portion of business revenue. Yet, the push to drive down working capital requirements, reduce outstanding and overdue claims mired in lengthy dispute resolution cycles and accelerate revenue recognition faces headwinds related to limitations of legacy interline settlements in most Class I, II and III railroads.
The Association of American Railroads now has 37 mostly painful weeks of traffic data. The decline, driven by a sputtering global economy suffering from the impacts of COVID-19, the worst health crisis since the 1918 H1N1 pandemic, saw total traffic (carload and intermodal) fall 10.5% in North America—11.2% in the U.S., 8.1% in Canada (where the coronavirus appears to be under much better control than its neighbor to the south), and 9.6% in Mexico.
Canadian Pacific Railway and Maersk will build and operate a transload and distribution facility that will expand CP’s existing Vancouver Intermodal Facility. It is slated to open in 2021. In Montreal, CP has opened a new transload facility.
For the first time in the nearly 200-year-old history of North American railroading, a woman has been named chief executive of a Class I railroad. On Jan. 1, 2021, BNSF Executive Vice President Operations Kathryn M. “Katie” Farmer will succeed Carl R. Ice as President and Chief Executive Officer. She will also assume leadership of BNSF’s Board of Directors. Ice will retire at the end of 2020 and remain on the company’s board.
COWEN AND CO. GLOBAL TRANSPORTATION & SUSTAINABLE MOBILITY CONFERENCE TAKEAWAYS: “Railroads are focused on adding back traffic at high incremental margins, though rail network congestion persists,” Cowen and Co. analysts Jason Seidl (Managing Director and Railway Age Wall Street Contributing Editor), Matt Elkott and Adam Kramer reported following presentations by several major carriers. “Freight fundamentals across all modes are strong, with retail and CPG (consumer packaged goods) restocking of inventories a major driver of the current spike in demand. Many customers are choosing to renegotiate TL (truckload) contracts early as spot rates just eclipsed 2018 peak levels and are likely headed higher.”
Marybeth Luczak has returned to the Simmons-Boardman Rail Group as Executive Editor of Railway Age, effective Sept. 10, 2020.