OREANDA-NEWS. Recent declines in rail traffic are unlikely to spread to other modes of transportation as the declines are primarily attributable to coal shipping, which mainly relies on rail transportation, Fitch Ratings says. However, rail traffic declines will persist into the midterm.

The Association of American Railroads (AAR) reported that total US rail carload traffic in 2015 declined by 2.5% from 2014 levels. 2015's overall rail traffic was below levels not seen since the rail traffic recovery began in 2009. AAR reported that 2016 is off to a mixed start as well. Overall carload traffic in January was 16.6% lower than January 2015. However, a closer look at the long-term annual data indicates that the majority of the declines are due to lower coal shipping. If coal is excluded from 2015 data, rail volume is comparable to levels seen in 2013 and 2014, on the strength of intermodal container traffic.

Coal usage has seen a large decline as power generators and other industries have switched to other means to produce energy. The US Energy Information Administration estimates US coal production declined by 11% in 2015. That was the largest decline in history. The organization also forecasts that coal production will continue to decline by 4% in 2016 and 1% in 2017. This will likely impact rail traffic for years to come. Coal is one of the largest users of rail traffic, accounting for nearly one-quarter of volume, along with intermodal containers and petroleum products.

However, we expect these trends to have only modest impacts on other modes of cargo movement. Data show that truck volume has been stable. Coal is typically not shipped via truck. Port container throughput growth slowed only marginally in second-half 2015. Volume declines in coal in the past year have been partly offset by continued intermodal cargo growth.