Coronavirus Depressing Intermodal Traffic

The effects of coronavirus pandemic is manifesting itself in depressed intermodal traffic.

The National Retail Federation said this week that the pandemic will have a longer and larger effect on imports at major U.S. retail container ports than was previously believed.

NRT said factory closings and travel restrictions in China have hindered production.

“There are still a lot of unknowns to fully determine the impact of the coronavirus on the supply chain,” said NRF Vice President for Supply Chain and Customs Policy Jonathan Gold in a news release.

Gold said Chinese factories have begun returning to production, but other issues are affecting cargo movement.

These have included the lack of availability of truck drivers to move cargo to Chinese ports.

Hackett Associates said its projections are that some sort of normalcy will return to trade by late March or early April.

The firm produces a monthly Global Port Tracker report for the NRF.

Forty percent of respondents to a recent NRF survey said they’re seeing disruptions to their supply chains while another 26 percent expect to see disruptions as the virus continues to spread.

U.S. ports covered by the Global Port Tracker handled 1.82 million 20-foot equivalent units in January, a 5.7 percent increase from December but down 3.8 percent from unusually high numbers a year ago related to U.S. tariffs on goods from China.

February was estimated at 1.42 million TEUs, slightly above the 1.41 million TEUs expected a month ago but down 12.6 percent from last year and significantly lower than the 1.54 million TEUs forecast before the coronavirus began to have an effect on imports, NRF officials said.

March is forecast at 1.32 million TEUs, down 18.3 percent from last year and less than the 1.46 million TEUs expected last month or the 1.7 million TEUs forecast before the virus.

April, which had not previously been expected to be affected, is now forecast at 1.68 million TEUs, down 3.5 percent from last year and lower than the 1.82 million TEUs forecast last month.

The Association of American Railroads said that for the week ending March 7 intermodal traffic was down 14.1 percent for the week compared to the same period of 2019.

U.S. weekly rail traffic was 462,303 carloads and intermodal units, down 9.1 percent compared. Total carloads for the week were 229,742 carloads, down 3.5 percent compared while intermodal volume was 232,561 containers and trailers.

“Comparing rail traffic from one week to another must be done with caution because many different factors can come into play, especially in the winter when the weather can play a big role,” said AAR Senior Vice President John T. Gray.

“That said, rail intermodal loadings last week were down noticeably more than the norm over the past year. With the number of ships arriving at West Coast ports from Asia down sharply due to the coronavirus, it stands to reason that railroads are beginning to feel an impact too, at least in terms of intermodal. It’s impossible to quantify that impact with precision.”

For the first 10 weeks of 2020, U.S. railroads reported cumulative volume of 2,323,120 carloads, down 6.2 percent from the same point last year; and 2,475,466 intermodal units, down 7.7 percent from last year.

Total combined U.S. traffic for the first 10 weeks of 2020 was 4,798,586 carloads and intermodal units, a decrease of 7 percent compared with last year.

“We’ve not seen the impact yet from the extended Chinese New Year volumes. But we expect to see this show up in our intermodal volumes over the coming weeks,” CSX CEO James Foote said at an investor conference in New York this week.

Foote said steamship companies serving China are optimistic that they will be able to return to normal operations once the coronavirus threat subsides.

Many sailings were cancelled due to the virus. Foot said CSX is ready to handle an expected surge in intermodal traffic once it comes.

Canadian Pacific Chief Financial Officer Nadeem Velani said at the same conference that international container volume will continue to falter into the second half of March and early April before recovering.

Velani expected as “quick recovery” as retailers and manufacturers restock their inventories, which have been depleted amid extended manufacturing shutdowns in China.

“We don’t see this as lost volumes,” Velani says.

Tags: Association of American Railroads, Canadian Pacific, China, coronarivus, CSX, intermodal, James Foote, John Gray, National Retail Federation