Oil price war could also affect traffic, but CP says it is "fully protected" by contracts.
NEW YORK – The full impact of the global coronavirus epidemic will soon be felt on North American railroads due to the lull in Chinese manufacturing and exports that feed intermodal volume, rail executives said this week.
Container volumes have already begun to sink at North American ports. At the Port of Los Angeles, for example, February container volume fell nearly 23%, the port announced on Tuesday.
International intermodal represents about half of all U.S. intermodal volume. Overall U.S. intermodal volume was down 12.5% last week, according to the Association of American Railroads.
“We’ve not seen the impact yet from the extended Chinese New Year volumes. But we expect to see this show up in our intermodal volumes over the coming weeks,” CSX Transportation CEO Jim Foote told an investor conference on Wednesday morning.
Steamship companies serving China have canceled scheduled sailings in recent weeks due to the coronavirus impact on manufacturing and transportation in China. But the shipping lines have an optimistic view that trade will quickly return to normal after quarantine-related shutdowns that extended the traditional Chinese New Year holiday period, Foote says.
CSX will be able to handle the anticipated surge in international intermodal traffic, whether it comes via interline service from West Coast ports or lands at East Coast ports the railroad serves, Foote says.
“We’ve got a great running railroad and capacity to handle traffic changes, whether it comes east or west,” he says.
International intermodal volumes will see the largest impact from the coronavirus in the near term in Canada, as well, Canadian Pacific Chief Financial Officer Nadeem Velani told investors and analysts on Tuesday. The railway expects international container volume to slump in the second half of March and into early April before rebounding.
CP sees a “quick recovery” as retailers and manufacturers restock their inventories, which have been depleted amid extended manufacturing shutdowns in China, where the virus first began to spread.