Rail Loading Soft; Ton-Miles Flat

Intermodal volumes fell somewhat faster than carloadings at a 2.6% rate. Overall volumes have continued to trend below 2006 levels.

The housing sector shows little sign of recovering from the steep decline it suffered in the third quarter of 2006. Asian imports have also slowed, and containership lines are restructuring. Higher rail intermodal rates and plentiful truck capacity have also contributed to the drop in intermodal growth.

Though overall loads have dropped, ton-miles declined only 0.3% during the week being examined. This would indicate that much of the decline in loadings is for short-haul freight or low-density freight.

A modest surge in holiday-related freight is expected in the autumn.

The rail industry is moving past the reporting periods where the weakness in housing and automotive first occurred, making year-on-year comparisons easier. This suggests carload volume has flattened out relative to 2006 levels and is likely to turn positive before the end of the year. But excess capacity in the truckload segment and changing international trade patterns are putting more pressure on rail intermodal. "We still expect a more normal fall freight season and significantly easier year-over-year comparisons in the carload business to drive a return to meaningful volume growth in [the fourth quarter], though weakness in intermodal units appears to be a risk to rail volume growth between now and the end of the year," said the Stifel Nicolaus report.