Posts Tagged ‘FRT Transportation Intelligence’

Intermodal Growth Seen Continuing into 2021

December 13, 2020

A railroad industry consulting firm has predicted that intermodal traffic will continue growing in 2021 but carload traffic will continue to struggle to recover from the COVID-19 pandemic.

FRT Transportation Intelligence predicted that intermodal traffic will increase by 5.4 percent in 2021 with most of that growth attributed to retailers restocking their inventories due to consumer demand.

Domestic container volume will rise by 6.2 percent while trailer volume is expected to hold steady.

The latter has been in decline in recent years but has received a boost in recent weeks by tight capacity in the trucking industry and a shortage of truck drivers.

FRT projects international intermodal volume to increase by 5.4 percent in 2021.

Todd Tranausky, vice president of rail and intermodal at FTR, said last week that those who still have jobs have shifted their discretionary spending from services to consumer goods as a result of pandemic-related factors such as social distancing.

Intermodal volume in past years has declined after its fall peak, but that had not been the case this year, Tranausky said.

Tranausky said a variable that could affect intermodal volume is the distribution of COVID-19 vaccines.

If vaccines help led to a diminishing of the pandemic in the second half of next year that could prompt consumers to begin spending again on such services as restaurants, theaters and cultural events.

In the meantime, FTR expects intermodal volume for 2020 to be 2.5 percent below 2019 levels despite increases in recent months in intermodal traffic.

As for carload traffic, it is tied to industrial production, which has lagged during the pandemic as it struggles to reach pre-pandemic levels.

Except for coal, agriculture and anything tied to crude oil, FRT expects carload traffic in 2021 to be flat.

The consulting firm sees some recovery in the first quarter and that second quarter year-over-year numbers will show large gains due to being compared to the pandemic-related traffic levels of 2020. 

Tranausky said carload volumes in the third and fourth quarters of 2021 will hinge on how the pandemic and consumer spending unfold, as well as whether there’s a federal stimulus and what shape it takes.

Grim Prognosis for Rail Freight Recovery

July 10, 2020

Transportation analysts speaking on a webcast this week said it is too early to tell if railroads will lose market share to trucks as they recover from the recession induced in part by the COVID-19 pandemic.

Analysts said during the webcast, which was sponsored by FRT Transportation Intelligence, there is evidence that trucking companies are getting back to the volume of business they had before the pandemic began last spring but rail volume remains subdued.

Todd Tranausky, vice president of rail and intermodal at FTR, said some shippers who were upset with Class 1 railroads before the pandemic might have taken advantage of a “loose” trucking market to shift some business there.

But Tranausky said it is still too early to say if railroads will lose market share to truckers as they did following the Great Recession of 2008.

He said railroads will rebuild market share if they can continue to provide consistent service of a quality similar to what they are offering now.

Rail freight carloads have risen since May but remain at about 85 percent of their pre-pandemic levels.

One advantage truckers have is they can haul industrial materials and consumer products. The latter are less likely to travel by rail.

Until manufacturing picks up, rail carload volumes will continue to lag. FTR analysts do not expect rail carload volume to recover through the rest of 2020 because industrial production has been slow to return.

Another factor is that truck capacity is expected to continue to be below capacity through at least May 2021, something that is not good news for railroad intermodal business.

“That’s going to make it harder for intermodal to be competitive,” Tranausky said.

Looming on the horizon may be another wave of business shutdowns and dimming consumer demand due to surging COVID-19 infection rates in several states.

Those could threaten the U.S. economy and hurt freight volumes.