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U.S. Rail Volumes Continue To Slip

FreightWaves

Year-to-date U.S. rail volumes fell for the week ending July 13, according to data from the Association of American Railroads.

U.S. rail traffic totaled 14.45 million carloads and intermodal units year-to-date, a 3.3 percent decrease compared with the same period in 2018. Of this, U.S. carloads totaled 7.03 million carloads, down 3.1 percent, while U.S. intermodal containers and trailers totaled 7.42 million units, down 3.5 percent.

In contrast, Canadian rail volumes year-to-date were up again despite a 1.3 percent drop in weekly carload volume. Year-to-date Canadian rail traffic was up 2.1 percent to 4.22 million carloads and intermodal units. Canadian carloads were up 2.4 percent to nearly 3 million carloads year-to-date, while Canadian intermodal units rose 1.8 percent to 1.92 million containers and trailers.

The continued decline of U.S. rail volumes was one of the themes mentioned in the second quarter earnings calls for CSX (NYSE: CSX) and Canadian Pacific (NYSE: CP).

"Both global and U.S. economic conditions had been unusual this year to say the least and have impacted our volumes. You see it every week in our reported carloads," said James M. Foote, CSX chief executive officer, during his company's second quarter earnings call on July 16.

Meanwhile, even though CP experienced record volumes for several key commodities in the second quarter, its leaders said an anticipated drop in U.S. grain volumes this fall resulting from less-than-desirable planting conditions could benefit Canadian grain.

"We're watching U.S. grain markets closely because, with the flooding and tough growing conditions that have emerged across the central and eastern U.S., actually this might present a pretty good opportunity for CP grains into these areas that are expected to be short production," CP chief marketing officer John Brooks said.

The "unusual" economic conditions mentioned by Foote refer to some seemingly inconsistent factors. On the one hand, trade uncertainty between the U.S. and China is weighing on the minds of Fortune 500 executives. 

But other domestic indicators, such as consumer spending levels, still suggest some strength in the retail sector, although potentially more so for the benefit of trucking.

"We are seeing a range of conflicting data points and economic indicators and regularly speak with customers who despite the recent downtime – slowdown, remain cautiously optimistic about the second half," Foote said. 

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