Dive Brief:
- U.S. rail carloads increased 3.3% year over year in April to 1,051,026, while combined carloads and intermodal originations jumped 5.1% to 2,150,026 over the same time period, according to the Association of American Railroads (AAR).
- Containers and trailers were up 6.8% year over year at 1,099,000 in April, and 15 of the 20 commodities tracked by AAR "saw carload gains compared with April 2017."
- The increase in rail traffic is a sign of a strengthening economy, the AAR stated, and correlates with other growing freight markets — specifically trucking.
Dive Insight:
As the trucking capacity crunch continues to tighten and rates rise, rail is getting a boost from shippers looking for ways to maximize their shipping options and routes without paying higher rates — a trend made increasingly clear by stronger intermodal gains.
"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 ten years," AAR Senior Vice President of Policy and Economics John T. Gray said in a press release.
As the rail freight market accelerates, rail rates could follow trucking's lead and start rising as well. However, rail traffic has lagged trucking traffic, and the rail industry isn't dealing with a similar capacity crunch.
Both market forces and government policy could spur railroads to ramp up digitization and implement new technology. As railroads enjoy higher traffic volumes, they may start to innovate more to keep up with the rising demand, something they've been historically slow to accomplish.
Norfolk Southern, for example, recently started using predictive analytics to streamline operations and maximize efficiency. The House of Representatives, meanwhile, recently passed the Federal Railroad Administration Safety Data Improvement Act to require railroads to standardize and share data on how they handle railway accidents.
Should it become law — is that railroads will not only need to come up with appropriate measures for collecting safety data. Some may turn to popular freight technologies like cloud-based data analytics services and artificial intelligence (AI).
That law along with the increase in rail traffic could bring a new tech revolution to the rail industry before long.