By Jeff Stagl, Managing Editor
Similar to Class Is, many regionals and short lines were saddled with soft or flat traffic volume in the first quarter.
Collectively, 475 small railroads registered 1,659,970 carloads in Q1, down 2.7% compared with Q1 2022’s mark, according to the RailConnect Index of Short Line Traffic compiled by Wabtec Corp.’s GE Transportation arm. The index data covers a 13-week period that ended April 1.
The biggest decliners among 14 commodity groups were paper products, down 18.8% to 84,300 units; coal, down 16.6% to 91,422 units; intermodal, down 7.7% to 285,082 units; lumber and forest products, down nearly 6% to 72,667 units; and chemicals, down 1.5% to 317,329 units.
The few traffic bright spots were motor vehicle and equipment loads, which jumped 12.3% to 36,969; stone, clay and aggregate movements, which rose 6.6% to 166,248; and farm and food product carloads (excluding grain), which rose 6.5% to 83,725. “All other carloads” — a broad category that includes various unique movements — shot up 21.5% to 26,676 units.
The RailConnect Index also revealed meager gains for petroleum/coke and metals and products traffic, and minimal declines for grain, ores and waste/scrap materials traffic on a year-over-year basis.
An informal email poll of regionals and short lines conducted by RailPrime provided more color about small railroads’ Q1 traffic.
![Alaska Railroad Corp.](https://www.progressiverailroading.com/resources/editorial/2023/69129-coal-loads-ARRC.jpg)
The Buckingham Branch Railroad (BBR) noted a 1% drop in carloads on a year-over-year basis. The short line operates 280 miles of track in Virginia and interchanges with CSX, Norfolk Southern Railway, and the Durbin and Greenbrier Valley Railroad.
The major traffic culprits were forest products, building materials and cement. But new transload business helped offset weakness in those three sectors, says BBR President Steve Powell.
“If not for the new business, we'd probably be down as much as other short lines, if not more,” he says.
A few positives also helped prop up the Alaska Railroad Corp.’s (ARRC) traffic in Q1. Coal loads jumped 18% to 2,264 cars and local/interline traffic increased 8.7% to 761 cars compared with Q1 2022 totals.
While increased crude-oil activity on Alaska’s North Slope helped drive local/interline traffic, one power plant that consumes coal was offline in Q1 2022, impacting that year-over-year comparison, says ARRC Director of External Affairs Christy Terry.
What greatly impacted the more than 470-mile regional’s traffic in the quarter? Two key commodity groups: petroleum and intermodal, which declined 6.7% to 1,420 cars and fell 31.9% to 4,426 cars, respectively.
“We are hearing the intermodal market has changed,” said Terry, referring to domestic intermodal softening and international intermodal strengthening. “[And] for petroleum, there have been some market demand changes.”
![Twin Cities & Western Railroad map](https://www.progressiverailroading.com/resources/editorial/2023/69129-map-TCWR.jpg)
Market volatility also impacted traffic for Rio Grande Pacific Corp. (RGPC), which registered a 16% drop in carloads for the quarter. The company owns and operates four short lines.
"About 95% of that lower traffic is related to falling crop prices, (corn, grain and soybean), South American crops selling cheaper than in the U.S. and Brazilian soybean crops enjoying a record year in production," said RGPC Director of Government Affairs Pam Juliano.
Meanwhile, Q1 traffic was flat for Palmetto Railways and down slightly for the Twin Cities & Western Railroad Co. (TCWR).
Operator of 360 miles of track in farming-rich areas of Minnesota and South Dakota, TCWR is largely agricultural dependent. So, the short line’s carloads ebb and flow according to the ag marketplace, says TCWR President and CEO Mark Wegner.
Unfortunately, “lukewarm agriculture markets” were a headwind in Q1, but better days lie ahead, he believes.
“Sooner or later the commodities will move, so I don’t see a concern/trend for all of 2023,” says Wegner. “I would expect to see a ‘catch-up’ in either or both the second and third quarters. The crop grown in 2022 in our trade area was similar if not slightly larger than the 2021 crop.”
The Q1 traffic outcomes were a bit more promising for Watco, which logged a 5.2% increase, and CRANDIC Rail, which registered a modest gain.
CRANDIC Rail operates 100 miles of track in east-central Iowa and directly interchanges or connects with all the major Class Is, Iowa Interstate Railroad Ltd. and Iowa Northern Railway Co. The short line is owned by logistics services provider Travero.
“CRANDIC’s carload shipments were up year over year, although that was coming off a slow Q1 2022. “There were pretty universal volume increases across commodity groups,” says Jeff Woods, Travero’s director of business development.
Meanwhile, Ironhorse Resources Inc. had a particularly strong quarter. Volume among its eight short lines — many of which operate in Texas — shot up 22% year over year.
“The main driver for the increase was frac sand volume. Well production and fracking are driving the increase,” says Greg Wheeler, Ironhorse Resources’ vice president of operations and safety.
Sierra Northern Railway had a very strong quarter, too — its traffic jumped 24%. The short line operates 75 miles of track and several branch lines in northern California, and interchanges with BNSF Railway Co. and Union Pacific Railroad.
“While our grain and transload business is the largest driver, we have been successful in landing new business on all of our branch lines over the last six to 12 months,” says Sierra Northern CEO Kennan Beard. “I think we will see this continued growth rate through 2023.”