9 January 2024Deutsche BankResearch North America Canada United States Industrials Air Freight & Logistics Industry Early Morning Haul Date Industry Update Rail volumes impress, Port imports, & MoreRail carloads - Yesterday, the Class 1 Rails reported volumes for the first week of the year. We compare last week's volumes to 2018, as both the first week of 2018 and the first week of 2024 ended on the 6th and included New Years Eve and New Years Day as the first two days of the week. Sequentially into the first week of the year, UNP was +6.1% in 2024 vs. +4.3% in 2018, CSX was +16.6% in 2024 vs. -0.9% in 2018, NSC was +12.0% in 2024 vs. +4.7% in 2018, and CNI was +11.5% in 2024 vs. +7.8% in 2018 (CP does not have pro forma combined CP-KCS carloads for 2018).Port imports - U.S. ports handled 1.89 million TEUs (20-foot equivalent units) in November, based on data from the National Retail Federation. The number was up 6.6% year over year but down 8% sequentially, with the sequential decline a bit better than typical seasonality. Based on U.S. Customs data, Descartes said yesterday it estimated U.S. port imports to be up 0.4% sequentially in December and up 9.2% year over year, which is pretty encouraging. But it also estimated Los Angeles was down -5.3% and Long Beach -8.5% sequentially vs. New York/New Jersey +5.1% and Savannah +2.6%. This may have some implications for Rail intermodal volumes if there is some market share shift back, though issues at the Panama Canal persist, which makes West Coast ports more accessible for Asian imports. And we're not seeing it in Rail volumes...for example, the five public Class 1s' last five weeks' carloads of 2023 (ending December 30) were down only 3% vs. the prior five weeks' carloads (ending November 25th), compared with -8%, -4%, -6% and -6% over the same two periods in 2022, 2021, 2020 and 2019, respectively...meaning rail volumes held up better as we closed out the year.Truck rates - The dry van market demand index was up 53% sequentially into the first week of the year, according to FTR Truckstop yesterday, above the average +36% sequential change into the first week of the year over the last five years. The dry van rate averaged $2.13 last week, down 1c sequentially after being up 9c the prior week. This is neutral to slightly positive...though we're now in the seasonally weakest part of the year, so we don't expect much sequential action until March.Diesel - Last week, the national price of diesel averaged $3.83, down 5c from a week ago, according to the EIA yesterday. It is down 17% from the recent peak of $4.63 reached in mid-September. It is still at somewhat elevated levels, but the constant week-on-week decline means a sequential profit headwind for most of Transports, especially LTLs, Parcels and Rails (LTLs and Parcel fuel surcharge mechanism...
