First time ever: Intermodal passes carloads in 2016

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For the first time ever, intermodal traffic, like this westbound stack at Cheyenne, Wyo., in July 2016, passed carload traffic.
Trains: Jim Wrinn

For the first time, intermodal is king of the rails.

In 2016, the number of intermodal containers and trailers overtook carloads by a slim margin, according to the Association of American Railroads.

Passing this symbolic milestone says more about the decline in carloads during 2016 than it does about intermodal traffic.

Intermodal was off 1.6 percent last year. Total units originated fell 220,000 to 13.5 million – the first time in four years that intermodal didn’t set an annual record. Still, 2016 was the third-best year ever for intermodal traffic, according to the AAR.

Carloads, on the other hand, sank 8.2 percent. Railroads originated 1.2 million fewer carloads, dropping the total to just over 13 million. Nearly all of the decline – just over a million carloads – was due to the 20 percent drop in coal traffic.

This was enough to put intermodal over the top. Railroads carried 394,000 more containers and trailers than carloads in 2016.

This is not good news for railroads’ top lines, as revenue per unit for intermodal is generally about a third of what railroads pocket from a carload.

“It was a bad year all around for carloads, except for grain,” says Larry Gross, an intermodal and rail analyst at FTR Transportation Intelligence. “Coal was simply the poster child.”

Gross expects both intermodal and carload traffic to fare better this year.

But looking long-term, merchandise traffic has declined by 2.2 percent a year since 2006, Gross says. Although that figure may not be as bleak if you factor in the conversion to higher capacity cars since the industry shifted to 286,000-pound loads, Gross says merchandise business is still stuck in a downward trend.

“I don’t see any signs of reversal,” Gross says. “The only way to reverse it is to take share off the highway.”

Thanks to an accelerating growth trend, intermodal had been closing the gap on carloads for decades. In 1990, U.S. railroads carried 9.8 million more carloads than intermodal units, according to the AAR. By 2000, railroads hauled 7.6 million more carloads. In 2010 the gap was 3.5 million.

Containers accounted for 91 percent of U.S. intermodal volume last year, continuing a trend toward greater use of containers. Overall trailer volume in the U.S. fell to its lowest level since the AAR began tracking it in 1989. Much of the 287,000-unit decline in trailers was due to a single event: Norfolk Southern’s restructuring of Triple Crown RoadRailer unit to just the Kansas City, Mo.-Detroit lane in late 2015.

NEWSWIRETrains News Wire

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