► Carloads Slightly Better. Volume declines decelerated slightly in week 31, validating further the argument that the downward trend in rail commodities, which has lingered for several quarters, may be stabilizing. The apparent bottoming coincides with the cautiously optimistic narrative expressed by several railroads during the second quarter earnings season. Despite the fact that volumes may be stabilizing, the road to recovery is likely to be a long one with speed bumps along the way. Total rail volumes decreased 17.5% in week 31, vs. declines of 18% and 17.8% in the prior two weeks. With the exception of agricultural products which declined 6.2% versus a y-o-y decline of 8.8% in the prior week, all major freight categories suffered double-digit declines for the week. Coal was down 12.9% y-o-y versus the prior week’s decline of 14.1%. QTD rail volumes were down 18.8% (19.1% the prior week) and YTD rail volumes were down 19.2%, inline with the prior week.
► Declines Still in Double Digits. Weekly declines in rail traffic were highlighted by a 47.5% drop in metallic ores & minerals (44.2% in week 30), a 26.3% slide in motor vehicles & equipment versus last week’s 26.5% decline, a 24.3% fall off in non-metallic minerals & products versus last week’s 23.1% drop, and a 26.5% slippage in forest products (25.9% in week 30). Agricultural products decreased 6.2% while intermodal and coal volumes declined 16.7% (16% in week 30) and 12.9% (14.1% in week 30). Chemicals traffic fell 11.3% (15.4% in week 30) and “other” traffic was down 17%, inline with week 30.
► Most Regions Improve.In the West, BNI’s and UNP’s volumes declined 16.7% (inline with week 30) and 16% (19.6% in week 30). In the East, CSX’s and NSC’s volumes declined 15.5% (16.8% in week 30) and 19.2% (20.6% in week 30), respectively. KSU’s volumes were down 0.7% (3.1% in week 30) while KCS de Mexico declined 24% (20.4% in week 30). In Canada, CNI’s and CP’s volumes were down 24.4% and 20.6% respectively (compared to 19.6% and 15.8% in the prior week).
► Service Levels Remain Solid. Overall performance in week 31 was better than that for week 30 as train speed increased 7.2% versus an increase of 6.4% in the prior week, cars on line improved 5.7% (inline with the prior week), and terminal dwell time improved 0.6% versus an improvement of 1.6% in week 30.
Source: Dahlman Rose & Company, LLC
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