Intermodal volumes jumped for many of the major Class I railroads in the second quarter this year, fueling increases in both their revenues and earnings while stoking hopes that more freight can be transitioned from trucks to trains.
Union Pacific Corp. (UP) said that out of its six business groups, intermodal garnered the second largest increase in volumes during the second quarter, rising 35%. UP’s second quarter business volumes, as measured by total revenue carloads, grew 18% vs. the same period in 2009 and represents the first time in six years that all six UP business groups reported volume growth in the same quarter.
Overall, UP posted net income of $711 million on 27% higher operating revenues of $4.2 billion in the second quarter, compared to net income of $465 million on $3.3 billion in operating revenues over the same period last year.
“We are bullish about continuing growth in domestic truckload conversions to our intermodal network, as driver pools and truckload capacity remain tight,” said Don Seale, chief marketing officer for Norfolk Southern Corp. (NSC) in the company’s second quarter earnings call with reporters.
Seale said NSC’s domestic volume, which was up 32%, led intermodal growth for the second quarter, with international volumes growing 10%, with an 8% increase in export and import shipments and 3% gain in exports. Premium intermodal volume jumped 19% as LTL and TL carriers used intermodal to roll out new services in the face of tight trucking capacity, he added.
He added that NSC’s intermodal revenues were 23% higher in the second quarter – reaching $451 million – compared to the same period last year. Overall, NSC’s net income increased 59% to $392 million, with railway operating revenues expanding 31% to $2.4 billion, in the second quarter this year compared to the second quarter in 2009.
“This is our fourth straight quarter of volume growth, and we are optimistic about continued year-over-year increases in rail traffic,” NSC CEO Wick Moorman pointed out.
CSX Corp. said that its revenue gains during the second quarter were also driven in part by intermodal volume growth. International volumes increased due to new business and higher imports as a result of U.S. inventory replenishments, while domestic volumes continued to grow with truckload conversions and expanded service offerings.
All together, CSX said its operating income climbed 33% to $768 million on a total revenue increase of 22% to $2.7 billion in the second quarter this year, compared to the same period in 2009.
“While the economy remains dynamic, our markets overall continue to improve, and our outlook remains positive," said Michael Ward, CSX’s chairman, president & CEO.