“Weekly volume data from the Association of American Railroads and analyzed by FTR shows that rail volumes, in the intermodal and carload sectors, are likely near the bottom,” FTR said in its State of Freight newsletter.
Intermodal started to bounce back first, FTR notes, although volumes remain well below pre-pandemic levels. Carload has stopped declining and will get a boost when North American auto assembly plants reopen, likely later this month.
But no recovery was seen for energy-related traffic — including coal and petroleum products — due to the collapse of oil prices and reduced demand for electricity.
“Coal may never regain the additional market share it is ceding to natural gas and renewables as a result of lower electricity demand,” FTR says.
Coal traffic was down 40% last week and has slumped 21% this year, according to the AAR.
A mild winter, coupled with record low natural gas prices, has made coal uncompetitive as a source of electricity generation and has prompted the fall in coal volume, rail executives and analysts have said.
The pandemic has sharply reduced electricity demand, as well, and coal now accounts for less than 20% of electricity generation, down from half of all power generation in 2008, according to IHS Markit.
