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August freight by the numbers

on Wednesday, September 12, 2012

Oil remains the stand-alone star for railcar loadings, according to monthly figures released Friday by the Association of American Railroads.

At 54,755 total U.S. carloads in August, shipments of “petroleum & petroleum products” represent the only commodity category reported in AAR’s monthly Rail Time Indicators that has exceeded all its post-2008 average weekly loadings since the start of this year. Monthly totals are up from about 37,000 in August 2011 and just 33,000 in August 2010.

Canadian data, which measures Canadian railroads, and the U.S. operations of Canadian National and Canadian Pacific, showed 31,726 total August carloads, up from about 23,000 in 2011 and 22,000 in 2010.

The information is unsurprising to readers aware of the Bakken formation underneath North Dakota, Montana, Saskatchewan, and Manitoba as well as the separate Alberta oil sands development. Railroads continue to benefit from a U.S. rejection of the Keystone-Excel pipeline that would have linked these oil projects to refineries and export holding tanks on the U.S. Gulf Coast. TRAINS contributor Fred W. Frailey wrote in June that oil companies are now free to send shipments wherever they can profit the most — from loading tanker ships from Texas, to making heating oil in New England or gasoline in California.

Although construction companies are working to get pipelines close enough to tap into oil projects directly, Keystone or no Keystone, until the pipelines are operational, most of that oil will flow over rails only.

For railfans: Watch the weather and the markets. Unit trains of tank cars with “foreign” motive power are unusual in some parts of the country, especially in the Midwest and Northeast, where coal and natural gas dominate electricity production. If the weather reports consistently predict a hard, long winter, more of these trains will head east to take advantage of price increases in home heating oil. In a mild winter, look for the trains to go where the price of delivered crude oil is highest.

Cars and wood

August shipments for “motor vehicles & parts” and “lumber & wood products” also looked good in August. They were up 12.9 and 15.4 percent, respectively, from August 2011. The motor-vehicle moves are a good sign that North American consumers are spending and that auto dealers are filling in inventories, as combined U.S. and Canadian moves totaled 106,531 in August. Recent historical charts from AAR show that this high-value freight class has followed the same average weekly ups and downs of the past four years, only higher. August was the first month that average weekly motor-vehicle moves were greater than in 2008 — the start of the recession.

Lumber, used in everything from new home construction to framing concrete forms, has had stable car loadings since February, at an average of about 9,000 weekly loadings in the U.S. and Canada. This level is higher than any time since 2008 and shows that local and regional lumberyards are restocking, just like auto dealers. The reason could be new home starts, American homeowners and businesses engaged in more remodeling, or the threat of a few more hurricanes that could hit the U.S. mainland, like Isaac did in late August.

For railfans: Look in your favorite spots for auto carriers and skeleton, bulk-head, and center-beam flatcars. If they were there before the recession, they will be coming back. Short lines in rural areas should also see an uptick because of the lumber trade. Ah, can’t you just smell the autumn air, envision azure skies and a smoky pair of Alcos running “elephant ears” on first trick with a lumber load for market?

Coal and intermodal

The railroad association’s data shows that U.S. railroad revenues from coal and intermodal loadings are about the same, at 23 and 22 percent, respectively, of total revenue. The difference is that coal is in a multiyear slump, while intermodal moves of containers and trailers through the U.S. were some 1.2 million in August alone, up from August 2011 and 2010. Average weekly intermodal loadings per month are nearly as high as the peak intermodal year of 2006. U.S. coal loadings in August were 614,760, down from about 663,000 in 2011 and 675,000 in 2010.

Canadian railroads have suffered little in these important commodity classes. Average weekly coal loadings are as high as any in the past five years — at about 9,000 per week — and average weekly intermodal shipments outperformed every month of the prior four years since January, peaking in June at just more than 54,000 containers and trailers a week.

For railfans: Outlook is dismal on unit coal trains. Although they make up the single most important revenue source for railroads, their low commodity value means they are just as likely to sit in yards and sidings waiting for the all clear as they are to be throbbing down the line for your waiting camera — usually on a rainy Monday night anyway. As intermodal increases, now is the time to test out new viewing spots on newly opening intermodal yards on secondary lines, so you are ready for the next economic boom time.

For more details, you can read AAR’s full Rail Time Indicators report.

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