Rail traffic jumps as trucking crunch forces shippers to get creative
- U.S. rail carloads rose 3.6% YoY to 1,050,653 carloads in March 2018, according to the American Association of Railroads (AAR), while containers and trailers jumped 6.5% to 1,082,239 units YoY.
- Combined U.S. carload and intermodal origins jumped 5% YoY to 2,132,892 units in March 2018.
- The March data confirms total rail traffic was 2.6% higher during the first 13 weeks of 2018 YoY.
The rail industry has been a little on edge regarding its 2018 trajectory, even though 2017 ended on a positive note. But the March data seems to indicate rail is definitely on an upward swing, especially when combined with February and January data for a more cohesive picture.
By all indicators, the economy continues to grow (which is why the Fed is expected to raise interest rates), subsequently giving rail a boost.
"Railroads are a derived-demand industry," said AAR Senior Vice President of Policy and Economics John T. Gray. "Their level of business depends to a large degree on what’s happening elsewhere in the economy. Economic signals today are mostly positive."
Another reason for rail's success is because of the trucking capacity crunch, which is forcing shippers to get more creative about moving their goods, as available capacity falls and rates tick up. Getting more creative means becoming more adept at using the carrier resources available, and that includes rail, possibly accounting for the rise in intermodal traffic.
While rail freight's growth hasn't been nearly as explosive as trucking, the March numbers are an encouraging sign for railways, suggesting more shippers are turning to rail for their logistics needs.
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