Freight Volumes Rising For Railroads, Truckers

This story appears in the April 12 print edition of Transport Topics.

Freight volumes for railroads and motor carriers rebounded as the first quarter drew to a close, industry trade groups said.

“Freight traffic on U.S. railroads is continuing to show solid signs of recovery with carload freight volume hitting its highest level since November 2008,” the Association of American Railroads announced on April 5.

Likewise, American Trucking Associations Chief Economist Bob Costello told Transport Topics, “I have every reason to believe our March numbers are going to be very good. Anecdotal comments from carriers about March volumes have been very upbeat.”

The trucking group’s tonnage rose 3.5% in the first two months of this year, compared with 2009. ATA is scheduled to report its March tonnage on April 27.

Through the first 12 weeks of 2010, which ended March 27, rail carloads reached 3.3 million and intermodal business handled rose to 2.4 million. Carloads rose 1.5% and intermodal climbed 8.6%, making the combined rail shipment growth 4.4%, according to AAR data.

“When you look at loads, I suspect that we’ve done about the same as the railroads so far this year,” Costello said. “At least we are in the same ballpark.”

“With only one more week yet to be reported in the first quarter of 2010, [the largest freight] railroads are on track to achieving the first year-to-year quarterly traffic growth in two years,” said Jason Seidl, a Dahlman Rose analyst, in a recent investor note. He noted that freight rose in 10 of the first 12 weeks of 2010.

The last year-to-year growth was achieved in the first quarter of 2008, Seidl said.

Rail ton-miles, a measure of one ton of freight shipped one mile, and carload freight rose 17% in the week ended March 27, including 63% more metal shipments, 29% more motor vehicles and 14% higher chemical loads, AAR said.

Intermodal cargo rose 12% in the same week.

“It is fabulous that rail intermodal is doing well, but there is a lot of trucking embedded in those numbers,” Costello said. “Trucking is also doing well and will continue to do well.”

He noted that truckload shipments have risen 12% in the past seven months, terming that growth “pretty solid.”

Credit Suisse analyst Christopher Ceraso attributed the freight growth to a broad range of economic improvements, including auto sales and production, steel production, construction, West Coast port container traffic and retail sales. 

He said in an investor note that rail volumes “appear to be nearing pre-financial-crisis levels.”

Truck tonnage also is improving, although it isn’t yet clear whether that growth will top normal seasonal patterns, he added.

BB&T Capital Markets analyst Thom Albrecht said in an April 5 note that some of the freight growth was because of demand to complete shipments before the first quarter ended, though freight trends have been “moving in the right direction since mid-November.”

Shipments of steel, metals and roofing materials in the central and southern United States are “leading the charge” along with dry van shipments in the West, Albrecht said.

“It appears many homeowners are catching up on expenditures or are dealing with roofing problems from the harsh winter,” Albrecht said.

Spot markets are strong as well, as the most recent Market Demand Index published by load-board operator Internet Truckstop reached 11.33, a two-year high.

Costello observed that in a typical month, truckload carriers handle about 16 million loads. That is about eight times larger than rail shipments. That differential can make it appear rail shipments are growing faster than trucking on a percentage basis because of trucking’s larger freight base, he said.

ATA collects data from thousands of truckers and publishes a monthly freight report. AAR collects its data from seven North American railroads and publishes the results weekly.

ATA’s report on loads during the first quarter will be completed next month.