Railroads post strong volume but struggle with congestion

Dive Brief:

U.S. railroads originated 964,356 carloads in May, a 30% YoY increase, and more than 1.15 million intermodal containers, a 26% YoY increase, according to the latest numbers from the Association of American Railroads.
The AAR figures highlight the increased demand for freight modes compared to the early days of the pandemic. The organization said 18 of the 20 commodity categories it tracks saw increased demand YoY in May and 12 of the 20 are up compared to the same month in 2019.
The latest figures from the Surface Transportation Board show all of the Class I railroads have seen their speed decline YoY and all except Canadian National have seen increased dwell times YoY as of June 3.

Dive Insight:

While demand for rail freight has recovered, the volume pouring in is beginning to strain networks

"There continue to be impacts from the disruptive supply chains, particularly within intermodal space, which when coupled with the continued volume strain are challenging, both our service and efficiency today," Union Pacific CFO Jennifer Hamann said during an analyst conference earlier this month.

Slides from the conference show that UP's trip plan compliance for intermodal dropped from 89% in January to 73% in May.

Railroads have been dealing with congestion issues across their networks. On the West Coast, rail dwell time at the San Pedro Bay surged to 11.2 days in April, up from nearly 8 days in January, according to the latest figures from the Pacific Merchant Shipping Association.

Intermodal specifically "had the best January to May period ever for U.S. railroads," AAR Senior Vice President John Gray said in a statement. "Railroads hope to build on these gains in the months ahead as they help the economy return to strong, sustainable growth.”

Kenny Rocker, Union Pacific executive vice president for marketing and sales, said they've been in contact with the port facilities about the congestion, specifically about technology to provide railroads more visibility into port operations. And the railroad is actively looking to grow in the region.

"Later this month, we introduced our pop-up ramp, capable of producing 45,000 lifts within our West Colton Yard," Rocker said. "We will begin our first intermodal presence in this region."