US intermodal traffic increased 12.6% year on year in week 41 as expensive diesel and limited truck capacity encouraged shippers to move freight by rail, FreightWaves reported, citing Association of American Railroads figures. Total US rail traffic grew 8.5%, outpacing the 5.5% average increase over the preceding four weeks. Across North America, intermodal volumes rose 10.8%, while overall rail traffic expanded 7.2%.
The gains followed intermodal growth of roughly 10% to 11% in the previous week, adding to demand for the road connections serving rail terminals. According to FreightWaves, JB Hunt told its earnings call that recruiting sufficient drayage drivers to carry containers to and from terminals remained difficult. The company’s comments highlight a capacity constraint in the local trucking operations needed to support rising intermodal volumes.
US carloads increased 3.5%. Primary metal products recorded growth of about 25%, while coke traffic rose 15.4%, metallic ores gained 7% and iron and steel scrap increased 9.1%. FreightWaves linked those movements to stronger steelmaking demand. Chemicals and petroleum shipments grew 2.6%, agriculture and food products increased 6.7%, and coal rose 0.9%. Vehicle and parts volumes gained 5.6%, their second successive weekly increase, although they remained 0.4% lower for the year. Primary forest products fell 10%.
Excluding coal and grain, which the report described as less sensitive to economic conditions, carload growth reached 4%. Competition is also changing the allocation of domestic intermodal business in the eastern US. FreightWaves reported that BNSF and CSX introduced interline partnerships after the announcement of Union Pacific–Norfolk Southern merger discussions, drawing some business from Norfolk Southern to CSX. Norfolk Southern executives expect that competitive pressure to continue.
Railroads have generally sought price increases one to two percentage points above rail cost inflation, the report said. Fuel surcharges typically take one to two quarters to reflect sustained fuel-price increases fully. Forthcoming earnings calls from CSX, Union Pacific, Norfolk Southern, CN and CPKC are expected to provide further evidence on volume and pricing trends into the fourth quarter. Analysts anticipate double-digit third-quarter earnings-per-share growth at most Class I railroads, with Norfolk Southern the exception at approximately 5.5%.