Freight Traffic Continues to Tumble Amid Economic Woes

A westbound Union Pacific intermodal train passes through Hermosa, Wyo., under searchlight signals and a receding storm on May 13, 2019. Photo by Steve Barry. 

Freight Traffic Continues to Tumble Amid Economic Woes

As the global economy continues to struggle through the coronavirus pandemic, the amount of freight being moved by U.S. railroads continues to tumble, according to the Association of American Railroads. Last week, U.S. railroads moved 403,283 carloads and intermodal units, down 23.3 percent compared with the same week last year.

Broken down by commodity, the numbers are even starker. Coal traffic was down 42.3 percent compared to the same week in 2019. Motor vehicles and auto parts traffic was down a staggering 88.2 percent, with just 1,943 carloads moving last week. And crude oil could be the next carload-type to plummet after oil prices dropped below $0 a barrel earlier this week. Last week, U.S. railroads moved 6,356 carloads of petroleum and petroleum products down 30 percent compared to the same week in 2019. 

On Tuesday, during a quarterly earnings call, Canadian Pacific executives said it was possible that crude oil traffic on the Class One could completely dry up as production is slowed across North America. The railroad moved 36,000 carloads during the first three months of 2020.

“Crude volumes are rapidly slowing, given the steep decline in demand resulting from COVID-19 and the impact of oversupply from the Saudi Arabia-Russia production dispute,” said Executive Vice President and Chief Marketing Officer John Brooks. “As we’ve seen in recent days with all the volatility, we are expecting a low demand environment in North America and globally until recovery starts to ramp back up.”

On the same day as CP’s earnings call, Union Pacific announced that it would be cutting executive pay by 25 percent and forcing all non-union employees to take four weeks of unpaid leave this summer. In a statement to KETV 7 Omaha, UP President Lance Fritz said he considered multiple options and that pay cuts were ultimately the best way to handle the “unprecedented drop” in traffic. The railroad also eliminated all nonessential spending through the end of 2020. 

—Justin Franz, Railfan & Railroad Magazine

This article was posted on: April 24, 2020