US intermodal rail volumes increased 12.6% year on year in week 41 as elevated diesel prices and limited truck capacity encouraged shippers to switch freight from road to rail, FreightWaves reported, citing Association of American Railroads figures. Total US rail traffic grew 8.5%, accelerating from an average increase of 5.5% over the preceding four weeks. Across North America, intermodal volumes rose 10.8% and overall rail traffic advanced 7.2%.
The latest rise extended a run of double-digit intermodal growth, following an increase of about 10%-11% the previous week. That expansion is putting pressure on the road connections serving rail terminals. According to FreightWaves, JB Hunt told its earnings call that recruiting enough drayage drivers to transport containers to and from terminals had become difficult, highlighting capacity constraints at either end of the rail journey.
US carload volumes increased 3.5%, with primary metal products gaining roughly 25%. Coke shipments rose 15.4%, metallic ores increased 7% and iron and steel scrap gained 9.1%. FreightWaves linked those movements to stronger demand from both blast-furnace steelmakers and electric-arc mini-mills. Chemicals and petroleum shipments grew 2.6%, agriculture and food products advanced 6.7%, and coal rose 0.9%. Primary forest products fell 10%.
Vehicle and parts traffic increased 5.6%, recording a second successive weekly gain, although volumes remained 0.4% lower for the year. Excluding coal and grain, which the report described as less sensitive to economic conditions, carload growth reached 4%. Analysts expected most Class I railroads to deliver double-digit third-quarter earnings-per-share growth, with Norfolk Southern the exception at approximately 5.5%.
Competition is also shifting in eastern US intermodal markets. FreightWaves reported that BNSF and CSX announced interline partnerships after Union Pacific–Norfolk Southern merger discussions were announced, drawing some domestic intermodal business from Norfolk Southern towards CSX. Meanwhile, railroads have generally sought rate increases one to two points above rail cost inflation, while fuel surcharges take roughly one to two quarters to fully reflect sustained fuel-price jumps. The report identified forthcoming railroad earnings calls as a test of whether volume and pricing strength would continue into the fourth quarter.