Inside This Issue
· Route Canal: Panama Drought Causing Sea Sickness for Shippers
· Turkey Jerky: Railroads Deliver for Thanksgiving Feasts
· Building Boom for Whom? RRs Reaping Gains from Infrastructure Act
· Crop Drop: Canadian Grain Movements Down Y/Y As Expected
· Hollywood Comeback: L.A. Port Seeing Return of Some Traffic
· Export Support: Coal Defies Decline with Help from Buyers Abroad
Track Talk
“The rhetoric has been increasing for years that coal is bad and has no place in the world as it transitions to cleaner, more sustainable energy. But that narrative fails to recognize that coal is a necessary element in achieving a cleaner energy infrastructure for the future… Coal touches all our lives as a key raw material that is used in the manufacturing of thousands of materials and products that we rely on and use every day.”
- CONSOL Energy CEO Jimmy Brock
Read American Places, a book with deep insights into the most important trends and developments across the U.S. economy -Jay Shabat, Publisher, Railroad Weekly
The Latest
· Now that America’s Thanksgiving has passed, it’s time to shop. Retailers are in general optimistic but also a little nervous, a sentiment captured by the department store Nordstrom in its earnings call last week: “We continue to see a cautious consumer, and it remains to be seen how changes in inflation, higher interest rates, and the resumption of student loan repayments will affect discretionary consumer spending during the holiday season.”
· Railroads have seen some uplift in retailer shipment volumes leading up to this year’s holiday shopping season. But the consumer freight market overall remains
weak, with total intermodal railcar loadings across North America still down 7% year-to-date through October, according to the AAR. Compared to the same period two years ago, intermodal volumes are down 11%. Compared to five years ago, the decline is an even steeper 14%. The problem is not so much that retailers aren’t selling stuff this year. It’s that they’ve been selling stuff from their inventory rather than ordering new stuff. That said, inventories have finally been running down, to the point where replenishment is now driving some new freight demand. But alas, railroads have struggled to grab their fair share, with trucking rates still depressed. Can North America’s Class I railroads get back to the levels of intermodal traffic they were handling five years ago, let alone grow beyond those levels? That’s one of the industry’s most important questions, one that will shape its longterm future.
· For a closer look at railcar loading trends over time, view the latest update from Yardeni Research here. In the second chart on page one, you can see the steady rise in intermodal activity coming out of the 2008-09 recession, up until about 2018. That’s
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