After a solid spring and summer of growth, the fall season has slowed the North American transportation sector's recovery.
Growth continues to slow in North American rail sector
When compared to the same time period of 2009, cumulative rail traffic volume for the week ending Oct. 23 still registered improvement, according to the Association of American Railroads (AAR). However, the rate of growth has slowed in the past few months. North American rail freight volume for the first 42 weeks of 2010 on 13 reporting US, Canadian and Mexican railroads totaled 15,674,472 carloads. The 9.8 percent year-over-year improvement over the same period in 2009 is slightly less than the 9.9 percent improvement reported at the end of September. Steel-specific shipments also registered slower improvement. Metallic ore volume rose 63.0 percent year-on-year, compared to a 64.4 percent gain last month; metal product shipments improved 46.5 percent, slightly less than last month's 49.2 percent increase; and metal scrap and waste only improved by 14.9 percent, down from the 16.4 percent gain reported in September. Container and trailer shipments, which represented the only segment that experienced an increased rate of growth in the previous report, only improved 15.1 percent year-over-year, compared to 15.2 last month-while that doesn't seem to be much of a slip, it could be seen as a turning point for slower growth in the near-term.
Nevertheless, the North American rail industry is recovering, even if at a slower pace, and major railroads are taking the opportunity to invest in improvements that will pay off once the overall economy is back up and running at full speed. On October 19, Norfolk Southern Railroad officials broke ground on a $95 million freight rail facility in Greencastle, Pennsylvania, as part of the railroad's 2,500-mile, multistate Crescent Corridor initiative. According to Rudy Husband, Norfolk Southern's director of public relations, the project, which will be finished sometime in 2012, will help establish an efficient, high-capacity intermodal freight rail route between the Northeast and the Gulf Coast.
As for fuel surcharges, December will see a slight rate hike, from November's 17 percent to 18.5 percent, based on October fuel prices of $3.052. Compared to years past, December's rate matches that of the same month in 2007, well before rates spiked up to 23.5 percent in December 2008. However, current surcharges are still significantly higher than 2009, when December rates were only 14.5 percent.
Trucking industry gains strength despite obstacles
While the American Trucking Association's seasonally-adjusted For-Hire Truck Tonnage Index increased 1.7 percent in September after falling 2.8 percent in August, the improvement is not necessarily anything to celebrate, according to ATA Chief Economist Bob Costello. "While I am glad to report that tonnage grew in September, the fact remains that truck freight volumes leveled off over the summer and early autumn," he said. "This is a reflection of an economy that is barely growing." Costello further noted that currently, the trucking industry is significantly smaller than it was prior to the recession, which has better equipped it to deal with slower than normal tonnage growth.
Trucking companies are finding slightly less difficulty finding drivers, although availability is nowhere near optimal levels. Another obstacle in the North American trucking industry is a growing reluctance for US truckers to deliver loads to certain areas of Canada. Ontario and Quebec implemented a mandatory speed limiter program, which equips all trucks crossing the border with a device that limits speed to a maximum of 65 mph. In a recent survey conducted by the Owner-Operator Independent Drivers Association, over 83 percent of US truckers no longer engage in cross-border trucking, and of those, nearly 25 percent said that speed limiter rules were the main reason they refuse to haul north of the border.
The most recent NAFTA data show that the value of exports from the US to Canada via truck increased 20.8 percent year-over-year in July 2010-however, July 2009 was when the speed limiter rules were just beginning to take effect in Canada. Trade statistics for August 2010, which will be compared to August 2009-when the rules were widely enforced-will likely show a drop in US to Canada trade via truck.
Barge activity improves on a yearly basis, but slumps month-on-month
Overall barge activity on the Great Lakes in September slumped for the first time in several months, according to the Lake Carriers' Association (LCA). Shipments by US-flag vessels registered a 6.3 month-on-month decrease in cargo from August, while still maintaining a 33.7 increase year-over-year. Likewise, iron ore cargos also dropped month-on-month in September, buy 10 percent compared to August, yet still increased 69 percent from the same month last year. Furthermore, September loadings at US ports increased 59 percent year-over-year and shipments from Canadian ports increased a substantial 167 percent. Year-to-date, the Lakes ore trade stands at 39 million tons, an increase of 102 percent compared to the same period last year.
Coal shipments on the Great Lakes followed the same trend as iron ore, dropping 6.8 percent month-on-month and increasing 32.5 percent year-over-year. Shipments from Lake Superior rose from September 2009, at 35 percent, while loadings in Chicago increased by a hefty 145 percent year-over-year. Additionally, coal loadings out of Lake Erie increased 13.6 percent in September compared to the same month last year.