Among the big four U.S. systems, BNSF Railway fared the best in the third quarter. Its intermodal volume was off 1.4%, while its overall traffic was down 2.9%.
The divergence between BNSF and UP volumes in the West comes as UP continues to implement its version of Precision Scheduled Railroading. BNSF remains the lone holdout against the operating model that has spread to the other U.S. Class I railroad systems.
Only one railroad — Canadian Pacific — showed third-quarter gains in intermodal and overall traffic. CP’s overall volume was up 1.6%, with intermodal up 4.5%, according to its Association of American Railroads Week 39 carload report.
Actual quarterly volume will differ slightly, as the quarter ended Sept. 30 but Week 39 ended Sept. 28.
Canadian rail traffic remained stronger than U.S. volumes in the quarter, continuing the trend so far this year. Canadian National’s overall volume was essentially flat, at a decline of 0.4%, while its intermodal traffic was up 1% in the quarter.
In the Eastern U.S., Norfolk Southern’s quarterly volume declined 6% overall, while intermodal was down 5.1%.
CSX Transportation’s overall volume declined 5.6%. The railroad’s intermodal volume was off 9.1%, thanks in part to major cutbacks in 2017 and 2018 that shed about 15% of intermodal volume as CSX scuttled its high-cost, low-margin hub-and-spoke intermodal system.
Overall traffic volume on the smallest Class I, Kansas City Southern, was down 0.6%. KCS intermodal volume was down 3.3% for the quarter to date, according to data from Susquehanna Financial Group.
The publicly traded Class I railroads will report their quarterly earnings results and official quarterly volumes later this month.
Railroad analysts say the dip in rail traffic this year is related to slowing economic growth, the impact of the U.S.-China trade dispute on the manufacturing and agricultural sectors, overcapacity in the trucking industry, and the implementation of PSR in the U.S.
The railroads have the inability to capture true truck traffic. If they could, regardless of the economy, their business would be up. What to they do instead, employ a user unfriendly operating system known as PSR in order to increase profits for Wall Street. With these results, if I was a WS investor, I would sell my rr stock for a better yield and in an industry that has a future. The railroads are becoming obsolete in the 21st century distribution system. They just don’t that yet and if they do it is full speed over the cliff. Another major event that has to happen to “save ” the industry, is major system mergers to create a true transcontinental system east and west, north and south.
I continue to fear that precision scheduled nonsense combined with a slumping economy are putting a number of Class 1’s on a fast track to oblivion.
I used to say, “As go the railroads, so goes the economy.” But with precision railroad it’s hard to know if reduced carloads are self-inflicted by operating policies, or lower shipper demand.
Given the chance the railroads blow it every time. There is no reason why we shouldn’t be seeing carloads exceeding those of last year. I believe with new traffic gains the railroads jettison older sources of traffic. The simple key to greater success is to keep and add as much traffic as possible.
The UP has always been a leader in the industry.