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Rail News: Rail Industry Trends

AAR cites crude volume record, another carload decline and opposition to NITL-proposed switching rules


The good news: U.S. Class Is originated a record 97,135 carloads of crude oil in the first quarter, up 20 percent from the 81,122 carloads registered in fourth-quarter 2012 and 166 percent from the 36,544 carloads originated in first-quarter 2012, according to the Association of American Railroads (AAR).

The bad news: U.S. railroads' carloads tumbled again last week after posting gains for a few consecutive weeks. For the week ending May 25, the roads registered 281,727 carloads, down 3.3 percent, and 248,210 intermodal loads, up 1.4 percent compared with volumes from the same week last year, according to AAR data.

Five of 10 carload commodity groups posted gains, led by petroleum and petroleum products at 28.7 percent. Grain volume fell 21.8 percent and metallic ores/metals traffic dropped 10.5 percent.

Meanwhile, Canadian railroads reported weekly carloads totaling 76,567, up 12.9 percent, and intermodal units totaling 53,805, up 31.3 percent year over year. Mexican railroads' carloads climbed 14.5 percent to 16,777 units, but their intermodal volume fell 2.4 percent to 9,847 units.

Through 2013's first 21 weeks, 13 reporting U.S., Canadian and Mexican railroads handled 7,778,640 carloads, down 0.6 percent, and 6,325,199 containers and trailers, up 4.1 percent compared with last year.

The AAR also announced it filed comments with the Surface Transportation Board (STB) opposing a proposed rulemaking to adopt revised competitive switching rules. Class Is could lose revenue equaling up to 80 percent of their annual capital budgets if the rules, as proposed by the National Industrial Transportation League (NITL), are adopted, AAR officials said in a press release.

The switching rules also would require far more rail-car switching and handling to move the same amount of goods and could affect an estimated 7.5 million carloads annually, each having an estimated revenue loss to the railroads equaling $1,044 per carload, they said. Moreover, mandatory switching can lead to local service disruptions, degraded service throughout the rail system and a decline in rail productivity, requiring more resources to move the same amount of freight, AAR officials claim.

“The STB should be concerned about promoting, not degrading, conduct that enhances the rail efficiency that makes our customers competitive in world markets and goods affordable for all Americans," said AAR President and Chief Executive Officer Ed Hamberger. "NITL’s proposal would seriously jeopardize the U.S. rail network’s operational efficiencies and productivity improvements that took more than three decades of hard work, investment and innovation to sharpen and refine."

NITL proposes that the STB eliminate existing competitive access rules and precedents as they apply to reciprocal switching and require a Class I to enter into a competitive switching arrangement whenever a shipper or group of shippers demonstrate that certain “objective operating conditions” exist. The changes would help correct an imbalance in the competitive access rules, NITL officials believe.