Industry Pulse: Start of peak season drives up rail demand
Editor's Note: This story is part of a weekly analysis of the logistics industry's latest statistics. See an overview in our data hub.
- Rail intermodal and carload traffic jumped again in August, despite a market dip in July, according to the Association of American Railroads' non-adjusted monthly rail traffic data.
- August is traditionally one of the top two traffic months for both carloads and intermodal units, based on AAR data dating back to 2014. This year was no exception, with August demand rising over both May and June's strong volumes.
- Historical data suggests the rise in August will be followed by a dip in demand in September, and then another strong month in October. The trends follow supply chain patterns as back-to-school and the fall holiday season are peak shopping season for many consumers.
As the gap between intermodal and carload volumes narrow for railroads, the industry's ties to seasonal trends is becoming more important.
While traditionally carloads dominated railroad traffic, recently intermodal volumes have come to challenge this trend. Each August and October, the strongest traffic months per year, intermodal shipments threaten to rise above the need for carload products, which are often commodities like coal, metals or chemicals.
In fact, as the graph below shows, August intermodal shipments accounted for more than half the monthly average. Over the past decade, the month's share of traffic has only risen, too.
The rising role of peak season, however, may be as much a story of carloads' decline as it is of rising consumer spending habits. Yet, with an increase in intermodal shipments also comes a greater demand for the commodity inputs into CPG and other retail products. Perhaps coal may be declining, but chemicals are rising, and this could lead to a mutual resurgence of rail freight in the coming year.
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