More glowing data on Canadian and US cargo and freight volumes, building on last month’s strong showing as detailed in your Madison’s Lumber Reporter July 11, is out this week by the AAR and from the ATA’s For-Hire Truck Tonnage Index.
The Association of American Railroads (AAR) Thursday reported increased total combined US weekly rail traffic for the week ending August 16, 2014; at 575,000 carloads and intermodal units which is up 4 per cent compared with the same week last year.
Others forecasts gains will average about 4 per cent to 5 per cent this year as the pace of economic growth favours the cost savings that come with service that takes about two days longer, Bloomberg explained Wednesday.
For the first 33 weeks of 2014, US railroads reported total combined US traffic of 18 million carloads and intermodal units, up 4.7 per cent from last year.
North American Transportation Rail and Truck
US gross domestic product expanded at a 4 per cent annualized rate in the three months ended June 30 after contracting 2.1 per cent in 1Q, Commerce Department figures show, said Bloomberg Wednesday.
Continued improvement in factory output, especially automotive manufacturing, helped drive US truck tonnage up in July, the American Trucking Association (ATA) said. The ATA For-Hire Truck Tonnage Index rose 1.3 per cent in July from June, and 3.6 per cent year-over-year.
“After a surprising decrease in June, tonnage really snapped back in July,” ATA Chief Economist Bob Costello said in a statement Tuesday. “This gain fits more with the anecdotal reports we are hearing from motor carriers that freight volumes are good.”
Compared with July 2013, the seasonally adjusted index increased 3.6 per cent, the largest year-over-year increase in three months, up from June’s 2.3 per cent year-over-year gain. Year-to-date, compared with the same period last year, tonnage is up 2.9 per cent.
The tonnage increase may originate in many places and sectors of the economy, including a 15.7 per cent increase in housing starts in July from June. Residential housing starts jumped 21.7 per cent year-over-year last month, the US Commerce Department said Tuesday.
Strong containerized imports also help fill truck-trailers on the inland leg of the supply chain.
In 2013, the trucking industry moved 69.1 per cent of all domestic shipments, up from 68.5 per cent the previous year. By 2024, that share is projected to increase to 70.8 per cent. Data from the American Trucking Associations also indicates that truckload volumes should grow by 3.2 per cent annually through 2018, according to Bloomberg Tuesday.
Perhaps most telling, Norfolk Southern Railway Chief Marketing Officer Donald Seale told investors on July 23, during the railroad’s second-quarter earnings call, that rates on a domestic container service jointly offered with Union Pacific Railway would rise 3 per cent on average September 1, after transcontinental rates increased 4 per cent on June 1. The two business segments account for 17 per cent of NS’s domestic intermodal business.
“As truck capacity tightens, we anticipate continued volume growth and pricing opportunity in our domestic network,” Seale said.
As well, this week Union Pacific detailed in it’s Capital Update: At the start of 2014 the railway announced a capital plan of US$3.9B which was later increased to US$4.1B in May. The additional US$150M was added specifically for equipment acquisitions (including 29 more locomotives) as well as additional capital investment targeting the northern region of the railroad; and, UP will also be increasing it’s Train, Engineer and Yard employees by 1,900 between August 2014 and January 2015. This is more employees than we have historically hired during any calendar year.
And in it’s Centerbeam Update, so important to lumber shippers, the railway said: Orders for this week are 58 per cent higher than the same week last year and 16 per cent higher than last week; We anticipate orders for next week to be similar to this weeks; and, We still have a couple hundred cars in soft storage as needed.
As with lumber producers, finding staff is becoming increasingly difficult for transport companies.
The ATA estimates that the US is short 30,000 truck drivers. Factors driving the shortfall include regulations, relatively low pay, and the fact that fewer young people are interested in getting into the profession.
According to a study cited by the ATA, 90 per cent of carriers said they couldn’t find enough drivers that met department of transportation (DOT) criteria.
At the end of July, Swift Transportation, the largest truckload carrier in North America, complained of a truck driver shortage in its Q2 earnings release. “We were constrained in the truckload and (central refrigerated systems) segments by the challenging driver market. Our driver turnover and unseated truck count were higher than anticipated,” according to the press release.
The company says it will now invest in drivers and that it will spend more on wages.