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Weekly U.S. intermodal volumes were up by nearly a quarter last week amid increased activity for domestic and international containers and trailers.
U.S. freight railroads moved 287,339 intermodal containers and trailers for the week that ended Saturday, a 24.5% increase compared with the same period in 2019, according to the Association of American Railroads (AAR).
Although intermodal volumes have been trending higher in recent weeks, last week’s year-over-year increase may also be partly attributable to when Labor Day fell in 2019 and 2020. Labor Day last year was on Sept. 2, whereas this year it fell on Sept. 9.
While intermodal volumes were higher, U.S. carloads on a weekly basis were 6.9% lower, at 222,298.
Combined weekly U.S. traffic was up 8.6% year-over-year to 509,637 carloads and intermodal units. Year-to-date U.S. volumes are 11.3% lower than the same period a year ago, at 16.57 million carloads and intermodal units.
U.S. rail volumes have been trending higher since April and May. This SONAR graph, which uses AAR data, is tracking U.S. carloads (RTOTC.USA, in blue), intermodal trailers (RTOIT.CLASSI, in orange) and intermodal containers (RTOIC.CLASSI, in green). (SONAR)
Separately, U.S. Class I railroad Kansas City Southern (NYSE: KSU) reportedly rejected a takeover bid (see below).
Railroads bullish on intermodal through fourth quarter
At an investor conference this week, U.S. Class I railroads pointed to market tailwinds for intermodal as reasons for the year-over-year growth.
International intermodal volumes have improved as factory operations in China return to normal following the COVID-19 pandemic, while e-commerce is boosting domestic intermodal volumes, the railroads said.
Intermodal volumes “have been very, very strong. Much to our delight [and] stronger than I thought it would have been,” said Mark Wallace, CSX’s (NASDAQ: CSX) executive vice president of sales and marketing, at the Cowen investor conference on Wednesday. Wallace noted that intermodal volumes quarter-to-date are up 6% from a year ago. “Clearly, the consumer is back. The consumer is spending. Inventories were depleted. People are buying things.”
Union Pacific (NYSE: UNP) President and CEO Lance Fritz also said domestic intermodal volumes were “strong,” noting demand from e-commerce and retailers’ focus on restocking after the pandemic disrupted supply chains earlier this year.
The thing “that’s really juiced up demand is e-commerce and the parcel side of the world. So, our parcel customers … UPS, FedEx, perhaps Amazon can be lumped in there to an extent. Their business is booming, and we’re seeing demand through those service products really, really strong, which is good,” Fritz said at the Cowen event.
Meanwhile, the National Retail Federation (NRF) said Wednesday that U.S. imports surged to unexpectedly high levels this summer and may have hit a record as retailers stock up for the holiday season and the U.S. economy continues to reopen.
But the group also said when it released its monthly port volumes report that other global headwinds remain, such as rising COVID-19 numbers in Europe and the potential ramifications there.
“It’s important to be careful how much to read into these numbers after all we’ve seen this year, but retailers are importing far more merchandise for the holidays than we expected even a month ago,” said Jonathan Gold, NRF vice president for supply chain and customs policy. “Some of these imports are helping replenish inventories that started to run low after consumers unleashed pent-up demand when stores reopened. But this is the clearest sign yet that we could be in for a much happier holiday season than many had thought.”
NRF’s Global Port Tracker reported that major U.S. ports handled 1.92 million twenty-foot equivalent units (TEUs) in July, which is 2.3% lower than July 2019 but 19.3% higher than June. August’s totals could be as high as 2.06 million TEUs, which is 6% higher than last year. Although August’s totals won’t be fully confirmed until October, if the estimate holds up, it would beat a previous record of 2.04 million TEUs set in October 2018, NRF said.
Kansas City Southern reportedly rejects takeover bid
Kansas City Southern (KCS) declined a $20 billion takeover offer from Global Infrastructure Partners and Blackstone Group’s infrastructure arm, according to a Wall Street Journal article on Wednesday.
KCS reportedly felt the offer of $208 a share undervalued the company, according to anonymous sources quoted in the article.
KCS has declined to speak publicly about the bid by the infrastructure investment firms, and it continued to do so at the Cowen conference Wednesday.
However, the railroad said at the conference that it readjusted its earnings-per-share guidance for 2020 to be roughly in line with 2019. Like other railroads, KCS had altered its guidance after the pandemic pummeled rail volumes in April and May.
This article first appeared on s29755.pcdn.co
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