What are your thoughts on November traffic? (Tony Hatch - ABH Consulting)

20161212 Tonyhatch (Cropped)

November traffic was lousy – unless you are a Canadian. But it just reminds us that the T&E shortage is primarily (though not exclusively) a US problem and that it was lousy to be a Canadian a year ago (droughts/fires/mudslides, etc). The AAR/RTI showed North American volumes down a bit (0.7%, with carloads up 1.4% (10/20 commodities showed increases) and intermodal down 1.4%. US totals were down 3.3% and Mexico was down 7%; Canada was up 10.5%, helped of course by Ag & Food up 41% (easy comparisons) and autos/parts up 23% (Mexico: down 11% - ? – while the US was +8%). Intermodal thoughts –

  • November AAR numbers showed overall down 2.7% because the US was down slightly more than 5%, and Mexico slightly more than 6%, overwhelming the Canadian 10% increase.
  • IANA showed an overall 2.5% decline, with domestic down 7% (even domestic containers down 4%) and international up 3.1%, mostly in BC and the US east coast.
  • Speaking of which, one of the key factors looking at 2023 and beyond is the level of share recovery at LA/LB; it won’t come easy as, for instance, Savannah is spending some $410mm to increase its container capacity by fully 50% - by 2025. What’s good for LA, in intermodal as well as baseball, is good for the wider (rail) world.
  • Maersk has a new CEO, the first non-Dane ever, as they see a “challenging” outlook for the next year, with volumes currently running down by almost a third (Hapag Lloyd, however, sees a “soft landing” in the box trade).
  • The challenge? The WTO sees global trade growing 1.1% in ’23 after ~+6% this year, and steamship capacity growing 8% next year and 9% the year after. The industry is returning to its traditional ways – which makes me wonder – will there be Congressional hearings??