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US Rail Traffic Fell in Week 20 Due to Intermodal Weakness

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Rail traffic declined

US railroad companies’ rail traffic volumes fell for the 17th consecutive week. On May 22, the Association of American Railroads reported that the overall rail traffic for these companies fell 1.8% in Week 20, which ended on May 18. US railroad companies hauled 536,358 units compared to 546,189 units hauled in the same week last year. Dismal rail traffic results for the week were mainly due to a 5.5% YoY (year-over-year) decline in intermodal volumes to 269,352 containers and trailers.

However, these companies recorded YoY improvements in their carload traffic during Week 20. Their carload traffic grew 2.2% YoY to 267,006 railcars in Week 20 with volume growth across five out of ten commodity groups—chemicals, coal, grain, motor vehicles and parts, and petroleum and petroleum products. These companies recorded volume declines across the farm, forest, nonmetallic minerals, metallic ores, and other categories.

Canadian and Mexican railcar traffic

Canadian railroad companies’ traffic rose 0.6% YoY to 155,470 units. The carload traffic grew 2.7% YoY to 85,865 railcars in Week 20. However, the intermodal traffic fell 1.8% YoY to 69,605 containers and trailers.

Mexican railroad companies’ cumulative traffic fell 0.4% YoY in Week 20 to 38,939 carloads and intermodal units. The intermodal traffic grew 6% YoY to 17,859 units, while the carload traffic fell 5.2% YoY to 21,080 railcars.

Company-wise performance

Among the seven Class I railroad companies, four reported rail traffic growth in Week 20. Canadian Pacific (CP) registered the highest gain of 2.8%. Kansas City Southern (KSU), Norfolk Southern (NSC), and Canadian National Railway (CNI) reported volume growth of 1.8%, 0.6%, and 0.1%, respectively. Union Pacific (UNP), CSX (CSX), and BNSF Railway recorded traffic declines of 4.2%, 2.8%, and 1.7%, respectively.

The iShares Transportation Average ETF (IYT) has allocated 52.5% of its fund in the ground freight and logistics industry. IYT has returned 13% year-to-date and outperformed the gains of the Dow Jones and the S&P 500, which have risen 10.5% and 13.9%, respectively.

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