Intermodal loadings strong in May

After slowing for most of 2012, year-over-year gains reaccelerated in May and recent indicators point to continued improvement. Rail intermodal loadings increased 0.3% from April to May. Seasonally adjusted loadings were at 1.027 million. Year-over-year growth improved after hitting a recent low in April. Growth hit 2.8% in May after growing just 1.6% in April. The year ago comparisons will continue to get easier during Q3.

According to IANA data raw volumes showed solid improvement in May – hitting a new record for seasonally adjusted data. Both Domestic and International registered improvement. AAR figures are showing stability. Volume is running near 6% ahead of last year in recent weeks, an improvement from earlier this year.

Outlook
The intermodal forecast is relatively unchanged this month. According to the IANA data, intermodal loadings originated during May came in slightly higher than forecasted. The better than expected results came from all sectors. However, domestic trailer loadings remain extremely weak and are expected to finish the quarter down over 10% year-over-year in Q2. After dropping 14.3% in 2009, volumes rebounded strongly in 2010 and surged 14.1%. The pace of growth slowed during 2011 but remained above trucking, rising 5.6%. Demand for intermodal is expected to grow 4.4% this year, 4.1% in 2013, and 4.7% in 2014.

Analysis
Service is stable as train speeds are drifting downward but remain modestly ahead of prior year. Domestic container loadings continue strong and are up over 15% year-over-year.

Intermodal’s growth story remains intact. So far this year, the growth in Domestic revenue movements appear to be, once again, substantially out-pacing that of over-the-road. Shippers continue to find that the current intermodal price/service equation meets more of their needs than previously apparent. Even as a slack economy and delayed government trucking regulations are pushing out the day of reckoning in terms of truckload capacity, intermodal gains continue. Such gains are no longer dependent on tight trucking or high fuel cost, but rather are an indication of the maturing of intermodal into a core transport option for all shippers.

AAR weekly data provides the most timely information on recent intermodal activity. Data is issued on Thursday of each week covering the prior week’s movements.

Still looking good: Recent AAR weekly figures indicate that N.A. intermodal growth has rebounded after the CP strike and most recently stood 6.4% higher than the same week last year, with the four week average at 5.3%.

Comparison with pre-recession activity levels: Comparing the current 4-week moving average volume with the average for the same period for the years 2006 through 2008, North American comps continue to run about 6% higher. U.S. comps are 3% ahead of pre-recession levels.

Canadian strike impact: Canadian y/y comparisons were impacted by the brief Canadian Pacific strike, resulting in two weeks of negative comparisons. Comps have quickly rebounded in recent weeks, with y/y increases back up to more than 10%.

NOTE:
Intermodal is rail intermodal units originated, seasonally adjusted. It contains International and Domestic containers as well as Trailers shipped via rail. The transfer of a container or trailer to another railroad for the purpose of terminating the shipment or passing it to another railroad is only counted as one loading. Intermodal is defined as a movement of a container or trailer via more than one mode of transportation (i.e. rail and truck).