Posts Tagged ‘U.S. Railroads’

Freight Traffic Fell 2.1% in May

June 6, 2019

Rail freight traffic was down 2.1 percent in May the Association of American Railroads reported this week.

U.S. railroads originated 1,291,671 carloads in May 2019, which was 28,065 fewer carloads that they handled in May 2018.

The railroads originated 1,315,684 containers and trailers in May 2019, a drop of 5.9 percent, or 82,521 units, from May 2018.

The combined U.S. carload and intermodal originations in May 2019 was 2,607,355, down 4.1 percent or 110,586 carloads and intermodal units from May 2018.

Six of the 20 carload commodity categories tracked by the AAR posted gains last month.

These included: petroleum & petroleum products, up 13,513 carloads or 25.9 percent; chemicals, up 2,630 carloads or 1.6 percent; and non-metallic minerals, up 2,534 carloads or 12.4 percent. Commodities that fell included: crushed stone, sand & gravel, down 20,358 carloads or 14.6 percent; grain, down 6,830 carloads or 5.7 percent; and primary metal products, down 3,117 carloads or 6.4 percent.

“The current weakness in the rail traffic numbers is due to a combination of factors,” said AAR Senior Vice President of Policy and Economics, John T. Gray. “These include flooding in the Midwest that’s been hindering the operations of railroads and many of their customers.

“More important is heightened economic uncertainty that’s being made worse by increased trade-related tensions; higher tariffs leading to reductions or disruptions of international trade, and lower industrial output. In addition, some rail markets are undergoing rapid change. For example, locally sourced frac sand in Texas is displacing sand that used to be shipped in by rail. Just by themselves, these reduced sand movements are having a material negative impact on total rail carloads.”

Excluding coal, carloads were down 26,417 carloads, or 2.9 percent, in May 2019 compared with May 2018. Excluding coal and grain, carloads were down 19,587 carloads, or 2.4 percent.

U.S. Freight Traffic Up 3.3% in April

May 3, 2018

Freight traffic on U.S. railroads was up 3.3 percent in April when compared to the same month a year ago the Association of American Railroads reported on Wednesday.

The railroads originated 1,051,026 carloads last month, which was 34,020 more carloads than April 2017.

AAR reported that the railroads originated 1,099,000 containers and trailers in April 2018, up 6.8 percent, or 69,630 units, from the same month last year.

Combined U.S. carload and intermodal originations in April 2018 were 2,150,026, up 5.1 percent, or 103,650 carloads and intermodal units from April 2017.

“Total U.S. rail traffic so far this year is a shade below where it was in 2015, but otherwise is higher than it’s been in the last 10 years,” said AAR Senior Vice President John T. Gray in a statement.

“Additionally, 15 of the 20 commodity categories we track had higher carloads in April 2018 than in April 2017, the most since January 2015. That’s good news for railroads and good news for the economy.”

Fifteen of the 20 carload commodity categories tracked by the AAR each month saw gains compared with April 2017.

These included crushed stone, sand and gravel, up 8,466 carloads or 8.6 percent; coal, up 7,337 carloads or 2.4 percent; and grain, up 5,305 carloads or 5.7 percent.

Commodities that saw declines in April 2018 from April 2017 included nonmetallic minerals, down 2,513 carloads or 13 percent; waste and nonferrous scrap, down 1,056 carloads or 7.1 percent; and primary forest products, down 651 carloads or 14.6 percent.

Excluding coal, carloads were up 26,683 carloads, or 3.8 percent, in April 2018 from April 2017. Excluding coal and grain, carloads were up 21,378 carloads, or 3.5 percent.

Carload, Intermodal Traffic Rose in March

April 5, 2018

U.S. railroads posted increases in carload and intermodal traffic in March, with about half of the categories tracked by the Association of American Railroads posting gains.

AAR said the railroads originated 1,050,653 carloads in March 2018, an increase of 3.6 percent, or 36,157 carloads, from March 2017.

U.S. railroads also originated 1,082,239 containers and trailers in March 2018, up 6.5 percent, or 66,151 units, from the same month last year.

The combined carload and intermodal originations in March 2018 were 2,132,892, up 5 percent, or 102,308 carloads and intermodal units from March 2017.

Commodities posting increases during March when compared with the same month a year ago included coal, up 24,867 carloads or 7.9 percent; chemicals, up 7,492 carloads or 5.9 percent; and crushed stone, sand and gravel, up 7,124 carloads or 8 percent.

Seeing declines were non-metallic minerals, down 3,563 carloads or 19.5 percent; motor vehicles and parts, down 2,257 carloads or 3.2 percent; and coke, down 1,423 carloads or 8.1 percent.

“Railroads are a derived-demand industry,” said AAR Senior Vice President of Policy and Economics John T. Gray in a news release.

“Their level of business depends to a large degree on what’s happening elsewhere in the economy. There’s always some economic uncertainty — today that involves, among other things, trade relations, commodity prices, and what the Fed will do about interest rates — but economic signals today are mostly positive. Rail traffic in March was largely positive, too, at least in terms of traffic segments that are most sensitive to what’s going on in the economy.”

Excluding coal, carloads were up 11,290 carloads, or 1.6 percent, in March 2018 when compared to March 2017. Excluding coal and grain, carloads were up 11,042 carloads, or 1.8 percent.

Total U.S. carload traffic for the first three months of 2018 have been 3,296,199 carloads, down 0.3 percent, or 9,027 carloads, from the same period last year; and 3,496,381 intermodal units, up 5.5 percent, or 181,304 containers and trailers, from last year.

Total combined U.S. traffic for the first 13 weeks of 2018 was 6,792,580 carloads and intermodal units, an increase of 2.6 percent compared to last year.

U.S. Railroads Expect to Benefit From Increase in Auto Maker Manufacturing Capacity in Mexico

March 10, 2016

With U.S. auto makers seen as likely to increase vehicle production in Mexico and that is likely to be good news for U.S. railroads.

Although many of those vehicles will be built for export markets that do not include the United States and Canada, analysts expect U.S. railroads to see increased traffic in parts used to make vehicles as well as the finished vehicles.

Larry Gross, who is president of his own consulting business, told Trains magazine that a substantial number of the vehicles being built in Mexico are expected to move north by rail.

train image2Railroads also could benefit from hauling parts destined for the Mexican assembly plants.

Although this might seem to be a boost for railroad intermodal business, Gross said the complication is that moving the parts would involve two railroads working together which often do not work well together.

Nonetheless, some agreements have been worked out, including one involving BNSF and Ferromex (Ferrocarril Mexicano, FXE) to move auto parts in containers between Chicago via El Paso, Texas, to an assembly plants near Mexico City at which Volkswagen builds engines and General Motors assembles engines, transmissions and Chevrolet and GMC pickup trucks.

The latest figures, which are from 2014, show that $73.5 billion in exports and imports moved by rail from Mexico to the United States.

Most of this traffic – more than half of which was vehicles and parts – was interchanged at gateways in Nogales, Arizona; Lardeo, Texas; and El Paso.

The statistics show that trucks handled about six times the business handled by railroads.

Trucks are not the only competitor for the railroads. “There is potential competition from ocean movement of vehicles, particularly into the East Coast,” Gross said. “How smoothly rail can flow across the border will be a key factor.”

Mexico is the third largest U.S. trading partner behind China and Canada. Auto production in Mexico began to accelerate after the 1992 adoption of the North American Free Trade Agreement.

Auto analyst Jim Gillette said that auto production in Mexico is expected to soon reach three million vehicles per year.

Auto makers are eyeing markets in South American and Europe for the vehicles they build in Mexico.

The Wall Street Journal recently reported that Ford Motor Company plans to open a new assembly plant in the Mexican state of San Luís Potosí in 2018 that combined with an existing factory near Mexico City would have a production capacity for 500,000 more vehicles annually.

The WSJ report said that three-quarters of Ford’s production would still be in the United States. More than a year ago General Motors said it would double its manufacturing capacity in Mexico.

A wide range of brands, including Fiat, Lincoln and BMW, are built in central Mexico.

Lower labor costs are often cited for moving production south of the border, but U.S. companies have also said that the quality of the work of the Mexican assembly plants has met and sometimes exceeded domestic U.S. quality standards.

A Detroit Free Press report said that despite the increase in production in Mexico about two-thirds of new vehicles built in North America will be assembled in the United States.

The report said that the rise in production in Mexico is expected to come at the expense of auto manufacturing in Canada.