Week Ending 25February2012: Rail Volumes Continue to Contract

March 1st, 2012
in econ_news

Econintersect: Week 8 of 2012 ending 25February 2012 shows rail traffic continued to contract over 2011 levels according to data released by the American Association of Railroads (AAR).

The Association of American Railroads (AAR) today reported a decline in weekly rail traffic for the week ending February 25, 2012, with U.S. railroads originating 281,644 carloads, down 5 percent compared with the same week last year. Intermodal volume for the week totaled 214,402 trailers and containers, down 2.8 percent compared with the same week last year.

The majority of the reason for the contraction is coal movements - which should only effect the profitability of railroads, and not really an economic indicator as coal is an alternative fuel. HOWEVER, intermodal also down, and is an economic indicator - therefore, a contraction of this data point bears attention.  

Follow up:

Week 8 2012 Carloads Intermodal Total
This week Year-over-Year -5.0% -2.8% -4.2%
This week without coal
Year Cumulative to Date -0.3% 1.6% 0.6%




Note that the total year-to-date traffic is slightly ahead of 2011 rates inspite of the slowdown in the last two weeks.

Steven Hansen

Source: AAR

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  1. Phil says :

    Doesn't the type of cargo beyond coal merit a more detailed look? For example, grain is down - because of the mild winter perhaps? Motor vehicles, metals & products, and lumber and wood procust are up substantially - doesn't that point to an improving economy?

  2. admin (Member) Email says :

    absolutely many elements of this rail data point to an improving economy - but finished goods are mostly moved in intermodal which is down.

    1) other transport sectors are not yet echoing this decline. but remember rail data comes only one week after period close. the next piece of significant transport data comes with diesel use, and then container counts.

    2)economic movements are not linear. even if other sectors of transport declined, it may not indicate a problem until the downturn continued over a period of time. we had a contraction last year at midyear.

    3) using a single economic element as your absolute pulse point will get you into trouble. things happen specific to that pulse point (both good and bad) that do not represent a comparative to the real economy.

    we track over 20 pulse points we believe are predictive - using roughly half for our economic index. the quantitative strength of our model is currently well away from recession territory.

    however, we do not toss out this rail data because it falls outside our model. this is a loose thread that puts us on alert to look for other small signs in other elements of the economy which could be indicating an economic slowdown - as well as discovering why intermodal is down (or whether there was a surge last year which makes comparatives inoperative).

    steven hansen

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