While some North American transportation sectors fluctuated month to month, overall annual gains remained strong throughout fall 2010.
Rail's momentum slows slightly, but maintains positive outlook
It goes without saying that 2009 was a terrible year for the overall economy, therefore improvements in 2010 did not come as much of a surprise. For the North American rail sector, freight volumes continued to improve year-on-year in the fall, even as month-to-month gains dipped. Commenting on November rail volumes, John Gray, Senior Vice President of the Association of American Railroads (AAR), said that even though US rail volumes were down in November from October levels-due largely to Thanksgiving-November marked the 11th straight month in which rail volumes were higher than year-earlier levels, something that hasn't happened since January 2006. "We're hopeful that recent gains in consumer confidence and some recent encouraging signs regarding consumer spending will mean a continuation of economic growth and further growth in rail traffic," Gray said.
Indeed, the US consumer confidence index rose in November to the highest level since June, with consumers more optimistic about future business conditions, according to the Conference Board. More consumer spending means more products needing transport, and if the Board's prediction that "improvement in consumers' mood will continue in the months ahead" proves accurate, rail traffic will maintain its upward momentum well into 2011.
However, the rate of rail's upward momentum slowed slightly in November, with smaller gains in traffic than previous months. When compared to the same time period of 2009, cumulative rail freight volume for the first 47 weeks on 13 reporting US, Canadian and Mexican railroads totaled 17,549,400 according the AAR, a 9.3 percent year-over-year improvement. But over a month prior, the growth rate was 9.8 percent.
The same trend is apparent in specific product volume. Cumulative shipments of metallic ore as of the week ending November 27 increased 57.9 percent year-on-year, shipments of metal products rose 43.6 percent, and metal scrap increased by 14.5 percent. But at the end of October, cumulative shipments for those products increased 64.4 percent, 46.5 percent, and 14.9 percent, respectively. Container and trailer shipments, which had previously maintained a steady rate of growth, slipped to a 14.8 percent year-on-year increase, compared to a 15.1 percent increase the month prior.
Trucking sector barrels ahead with higher tonnage levels and increased new truck orders
Trucking in North America continued to lead the transportation pack in terms of improvement. According to the American Trucking Association (ATA), the seasonally adjusted Truck Tonnage Index increased 0.8 percent month-on-month in October 2010, and compared to October 2009, the index climbed 6 percent.
ATA Chief Economist Bob Costello said that truck tonnage changes over the last couple months shows there are some bright spots in the US economy. "October tonnage levels were at the highest level in three months, even after accounting for typical seasonal shipping patterns," Costello said. "These gains fit with reports out of both the manufacturing and retail sectors and show there is a little bit of life in this economic recovery."
Another indication of the trucking sector's bullish attitude toward 2011 is the rise in orders for North American Class 8 tractors. According to freight analysts FTR Associates, preliminary data show net orders for all major North American truck manufacturers totaled 26,005 units, representing a 38 percent month-on-month increase and the highest monthly order level since May 2006. While fall is historically the peak season for new truck orders, FTR suggests that the higher-than-expected order activity could be interpreted as a positive outlook for trucking going into 2011.
Barge activity improves on a yearly basis, but still slumps month-on-month
For the second month in a row, October's iron ore shipments on the Great Lakes reflected a monthly decrease. The total 5,026,477 net tons of iron ore transported via barge reflected a 6.1 percent decrease from September, even though compared to October 2009, shipments were still up 30.5 percent. Broken down into region, US ports increased 28.3 percent year-on-year, while shipments from Canadian ports along the Seaway were up 46 percent.
As for other steel-related shipments, the Great Lakes coal trade also dipped in October, by 8.1 percent month-on-month, but more notably, registered a 10.3 percent drop from October 2009. Shipments from Lake Superior fell 19 percent year-on-year, while loadings in Chicago increased marginally and Lake Erie shipments remained basically unchanged from year-ago levels.
But at the end of 2010, a small victory in for the North American barge market tempered the seasonal downturn in activity. On December 2, a federal judge in Chicago denied a request by a coalition of Great Lakes states to shut two Chicago navigation locks in order to prevent Asian carp from invading the lakes. "At the end of the day, plaintiffs have not carried their burden of showing that the balance of the harms weighs in their favor," Judge Robert Dow Jr. wrote in his 61-page ruling. While environmental groups and representatives of the fishing industry were disappointed with the ruling, barge companies let out a collective sigh of relief, as the lock closure would have impacted barge traffic through Chicago's industrial area.