U.S. rail traffic fell for sixth straight month in July

(Source: Progressive Railroading 8/8/2019)

For the sixth consecutive month, U.S. rail traffic tumbled in July compared to year-ago levels, according to Association of American Railroads (AAR) data.

U.S. railroads originated 1,264,100 carloads last month, down 4.8 percent, and 1,314,333 intermodal containers and trailers, down 6.1 percent year over year. Combined, the railroads originated 2,578,433 carloads and intermodal units, a 5.5 percent decline compared to July 2018 levels.

Six of the 20 carload commodity categories that AAR tracks every month posted gains in July. They included petroleum and petroleum products, up 6,465 carloads or 11.5 percent; all other carloads, up 2,866 carloads or 9.9 percent; and metallic ores, up 2,456 carloads or 7.7 percent.

Commodities that logged decreases last month included coal, down 43,954 carloads or 10.3 percent; crushed stone, sand and gravel, down 6,350 carloads or 5.1 percent; and primary metal products, down 4,884 carloads or 9.9 percent.

“Rail traffic in July, as in many other recent months, was held back by declines in three of the largest rail traffic segments, coal, grain, and intermodal,” said AAR Senior Vice President of Policy and Economics John Gray in a press release.

Despite a summer heat wave, very low natural gas prices weakened seasonal demand for coal-generated electrical power, he said.

“These same low natural gas prices appear to have allowed chemical production to pretty much hold steady even in the face of the uncertainty around foreign trade which has been the source of much of the recent growth in chemical production,” added Gray.

Trade policy uncertainty also had an impact.

“With 50 percent of rail intermodal business which is overseas — including international trade, both imports of consumer and intermediate manufacturing components and exports such as food products — trade policy uncertainty continues to drag down this traffic segment,” said Gray. “Export grain movements are also facing increasingly serious headwinds from threats to trade policy stability.”

Excluding coal, carloads fell 2.3 percent last month. Excluding coal and grain, carloads were down 2.2 percent.

For the first seven months of 2019, total U.S. carload traffic dropped 3.2 percent to 7,816,318 units, while intermodal volume fell 3.7 percent to 8,238,594 units compared to the same period in 2018.