- August was the best month for intermodal volumes on U.S. railroads since October 2018, according to the Association of American Railroads. U.S. railroads originated more than 1.1 million intermodal containers, representing 3% growth year over year (YoY). Carload volume in August declined 15% YoY at 898,227. Both indicators dropped from July to August, but the intermodal growth compared to August last year has engendered optimism from industry stakeholders.
- Early numbers shared by rail executives indicate a stronger third quarter for intermodal, which executives attributed to the recovering consumer economy, retail restocking and a tighter truck spot market.
- Intermodal volume is up 6% quarter to date for CSX, and premium volume (automotive freight and finished vehicles) is up 4% quarter to date for Union Pacific, executives from the respective railroads shared at the Cowen Global Transportation Conference Wednesday.
CSX Executive Vice President of Sales and Marketing Mark Wallace described the resurgence in intermodal volume so far in Q3 as a "nice boost," crediting the resurgence of consumers after they stayed home for several months due to the pandemic. He said CSX expects the growth to continue through the fourth quarter.
Union Pacific CEO Lance Fritz said the continued shift of consumer spending online has brought in business from small parcel carriers and the broader e-commerce ecosystem. Plus, with the Asia to U.S. pipeline continuously recovering from pandemic-related shutdowns, imports for inventory replenishment are picking up.
"A fair amount of destocking occurred, and we're beginning to see a fair amount of restocking," Fritz said. The CEO reaffirmed the railroad's forecast that volumes would be down 10% YoY for the full year. With most other commodities down across U.S. railroads, grain and farm products showed signs of recovery in August, according to AAR numbers.
"Much of what’s inside the trailers and containers on an intermodal train ends up on the shelves of stores, or finds its way to consumers’ doors via e-commerce merchants," AAR Senior Vice President John T. Gray said in a statement.
Despite what may turn out to be a dramatic recovery for certain segments of the railroads' businesses, pricing is unlikely to shift until 2021, Wallace said. Most of CSX's intermodal business runs on long-term contracts, so the railroad won't be able to raise pricing mechanisms until next year, for the most part.