For the most recent week’s data available (Ending November 21), AAR reported total weekly rail traffic was up 2.5 percent as compared to the same week the prior year. This continues to show very good overall economic conditions, however it does appear the good news is primarily concentrated in the intermodal sector (containers and trailers), which itself was up 11.5 percent. Overall, many basic industries remain well below prior levels. This not only includes coal, as expected due to recent energy sector trends, but also metallic ores and metals, nonmetallic minerals, and similar industries.

It is also interesting to note that Canadian railroads have done better than those in the US, with total carloads up 18.3 percent, according to AAR. Similarly, year-to-date carloads for Canadian railroads declined less than for U.S. carloads, a decline of 5.2 percent vs. 8.5.

One might conclude that the consumer appears to be spending based on the continuing strength in intermodal traffic, while some elements of our economy still are struggling to reach prior levels of output.

For shippers, this remains an excellent time to upgrade or add to your railcar fleet as demand remains below historical trends. This includes covered hoppers, gondola railcars, and open-top hoppers.

As we have indicated in recent posts, the expectation of growing demand for rail capacity as North America comes out of the pandemic-related slow-down will very likely make it more difficult and expensive to add to or upgrade your fleet in the future.

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