June 23, 2015 Monthly Intermodal Traffic Exceeded Carloads for the First Time in History On June 3, 2015 the Association of American Railroads (AAR) reported that monthly intermodal (trailers and containers) volumes topped carload for the first time ever. May Statistics: Carload traffic: 1,074,285 carloads Down 9.4% or 111,539 carloads from May 2014 If you remove the reduction in coal, carload traffic was only down 4.5% or 33,547 carloads Intermodal Traffic: 1,085,968 containers and trailers Up 3.8 % or 40,057 units from May 2014 Total U.S. carload and intermodal Traffic: 2,160,253 Down 3.2% or 71,482 carloads and intermodal units from May 2014 Commodities that saw significant carload declines in May 2015 from May 2014 included: Coal: Down 17.4% or 77,992 carloads Primary Metal Products: Down 17.9% or 8,058 carloads Crushed stone, gravel and sand: Down 7.9% or 7,546 carloads Grain: Down 6.2% or 5,027 carloads First 5 Months of 2015: Carload traffic: 5,844,411 carloads Down 3 % or 179,906 carloads from 2014 Intermodal Traffic: 5,487,880 containers and trailers Up 2% or 109,645 containers and trailers from 2014 Total Rail traffic volume: 11,332,291 carloads and intermodal units, Down 0.6% or 70,261 carloads and intermodal units from the same period last year. “Mixed signals is a good term to use to describe the economy nowadays, and it applies to rail traffic too. Intermodal is on its way to another record-breaking year, but carload traffic is not doing well,” said AAR Senior Vice President – Policy and Economics, John T. Gray. “The degree to which coal carloads have fallen has been a surprise, and the relative weakness in other carload categories is a sign that the economy is probably not yet in bounce-back mode after a dismal first quarter.” What does all of this really mean? First of all, when comparing Q2 2015 to Q2 2014 you must keep in mind the economy was in a very different place. In Q2 2014, the GDP grew at +4.2% and there was very strong volume and demand, however, in Q2 2015 the GDP was down -0.7%. Reasons carloads are down: Coal carloads are down because of reasons not necessarily tied to the economy: More electric production from natural gas and less from coal Higher coal domestic inventories Strong US dollar causing coal exports to be down Sand carloads are down due to the fracking well slowdown over the global cost of oil Reasons intermodal containers are up: Strong US dollar is causing imports to increase. Odyssey will continue to monitor the economy and its effect on the industry. In the meantime, if you have any questions about how this will affect your specific business process please free to call 1-885-412-0200.