Figures released by the American railway industry last week have added a splash of fuel to smoldering concerns over the health of the U.S. economy.
The Association of American Railroads says U.S. carload traffic fell below 945,000 loads in April, down more than 16 percent from April 2015.
Combined carload and intermodal originations were slightly higher than 1.97 million in April, down 11.8 percent from a year ago.
All but five of the freight categories tracked by AAR showed year-over-year carload declines with coal dropping by 40 percent, petroleum by 25 percent and grain mill products by seven percent.
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Total U.S. carload and intermodal units were down 716,000 units between Jan. 1 and April 30, which was a 7.8 percent drop from 8.46 million units.
John Gray, senior vice-president of policy and economics at AAR, said sharp declines in coal volumes were the main factor behind lower traffic numbers.
Coal movement was affected by low natural gas prices and high coal stockpiles at American power plants.
“Coal accounted for just 26 percent of non-intermodal rail traffic … in April 2016,” Gray said in a May 4 news release.
“(That’s) down from 36 percent in April 2015 and 45 percent as recently as late 2011.”
Gray said non-coal carloads are expected to strengthen in the future. Intermodal weakness in April was likely a function of high business inventories that need to be drawn down before new shipments were made, he added.
American railway operators are already adjusting their operations to compensate for lower shipper demand.
BNSF parked 45 locomotives at its rail yard in Fargo, North Dakota, earlier this week, citing sluggish shipper demand.
BNSF spokesperson Amy McBeth said the locomotives will stay in storage until shipper demand improves.
“Customers’ volumes across a broad spectrum of commodities in the near-term have come down somewhat from their prior estimates,” McBeth said.
“As a result, we are strategically storing locomotives in some yard locations across our network.”
BNSF has been cutting staff in the wake of a challenging economic environment, which includes low energy prices and a strong U.S. dollar.
Company profits were down 25 percent in the first quarter of 2016 to US$784 million.
Revenues were down 15 percent to $4.76 billion.
Contact brian.cross@producer.com
