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posted on 09 September 2016

Rail Week Ending 03 September 2016: Down 5.7% For The Month Of August

Week 35 of 2016 shows same week total rail traffic (from same week one year ago) contracted according to the Association of American Railroads (AAR) traffic data. This week, all rolling averages' were mixed.

Analyst Opinion of the Rail Data

We review this data set to understand the economy - and one element continues to stand out. If I remove coal and grain from the analysis, rail is declining a around 5% (this week 3.7%). Under normal circumstances one should consider this recessionary as trucking tonnages are down also. But consumption seems to have migrated from goods purchases to services (such as health care). Even though rail is in contraction, this week was better than last week.

The contraction began over one year ago, and now rail movements are being compared against weaker 2015 data - and this is the cause periodic acceleration in the short term rolling averages. Still, rail is weak to very week compared to previous years.

This analysis is looking for clues in the rail data to show the direction of economic activity - and is not necessarily looking for clues of profitability of the railroads. The weekly data is fairly noisy, and the best way to view it is to look at the rolling averages (carloads and intermodal combined).

Percent current rolling average is larger than the rolling average of one year ago Current quantities accelerating or decelerating Current rolling average accelerating or decelerating compared to the rolling average one year ago
4 week rolling average -5.7 % decelerating accelerating
13 week rolling average -5.7 % accelerating accelerating
52 week rolling average -7.0 % decelerating decelerating

A summary of the data from the AAR:

The Association of American Railroads (AAR) today reported weekly U.S. rail traffic, as well as volumes for August 2016.

Carload traffic in August totaled 1,347,989 carloads, down 6.6 percent or 95,341 carloads from August 2015. U.S. railroads also originated 1,327,274 containers and trailers in August 2016, down 4.8 percent or 66,889 units from the same month last year. For August 2016, combined U.S. carload and intermodal originations were 2,675,263 down 5.7 percent or 162,230 carloads and intermodal units from August 2015.

In August 2016, eight of the 20 carload commodity categories tracked by the AAR each month saw carload gains compared with August 2015. These included: grain, up 24.7 percent or 23,857 carloads; waste and nonferrous scrap, up 25.4 percent or 4,182 carloads; and chemicals, up 1.1 percent or 1,699 carloads. Commodities that saw declines in August 2016 from August 2015 included: coal, down 16.1 percent or 86,638 carloads; petroleum and petroleum products, down 25.1 percent or 17,650 carloads; and crushed stone, gravel and sand, down 6.9 percent or 8,913 carloads.

Excluding coal, carloads were down 1 percent or 8,703 carloads in August 2016 from August 2015.

Total U.S. carload traffic for the first 35 weeks of 2016 was 8,668,572 carloads, down 11.1 percent or 1,081,450 carloads, while intermodal containers and trailers were 9,042,678 units, down 3.1 percent or 288,427 containers and trailers when compared to the same period in 2015. For the first eight months of 2016, total rail traffic volume in the United States was 17,711,250 carloads and intermodal units, down 7.2 percent or 1,369,877 carloads and intermodal units from the same point last year.

"While August showed improvements in some categories, the big story in terms of rail traffic last month was the continuing surge in carloads of grain," said AAR Senior Vice President of Policy and Economics John T. Gray. "Railroads, along with barges and trucks, are a critical part of the grain logistical chain. The fact that this chain generally functions smoothly is a testament to the tremendous efforts that transportation providers, including railroads, put forth in support of their grain-related customers."

Week Ending September 3, 2016

Total U.S weekly rail traffic for the week ending September 3, 2016 was 538,826 carloads and intermodal units, down 5 percent compared with the same week last year.

Total carloads for the week ending September 3 were 273,117 carloads, down 4.9 percent compared with the same week in 2015, while U.S. weekly intermodal volume was 265,709 containers and trailers, down 5 percent compared to 2015.

Five of the 10 carload commodity groups posted an increase compared with the same week in 2015. They included grain, up 30.2 percent to 24,455 carloads; miscellaneous carloads, up 24.1 percent to 11,425 carloads; and motor vehicles and parts, up 5.5 percent to 19,557 carloads. Commodity groups that posted decreases compared with the same week in 2015 included petroleum and petroleum products, down 24.4 percent to 10,770 carloads; coal, down 16.2 percent to 90,575 carloads; and forest products, down 6.8 percent to 10,631 carloads.

Coal is over 1/3 of the total railcar count, and this week is 14.7% lower than the production estimate in the comparable week in 2015. The middle row in the table below removes coal and grain from the changes in the railcar counts as neither of these commodities is economically intuitive.

This Week Carloads Intermodal Total
This week Year-over-Year -4.9 % -5.0 % -5.0 %
Ignoring coal and grain -3.7 %
Year Cumulative to Date -11.1 % -3.1 % -7.2 %

[click on graph below to enlarge]

Current Rail Chart:

z rail1.png

For the week ended August 27, 2016

  • Estimated U.S. coal production totaled approximately 16.3 million short tons (mmst)
  • This production estimate is 2% higher than last week's estimate and 14.7% lower than the production estimate in the comparable week in 2015
  • East of the Mississippi River coal production totaled 5.9 mmst
  • West of the Mississippi River coal production totaled 10.4 mmst
  • U.S. year-to-date coal production totaled 453.9 mmst, 24.5% lower than the comparable year-to-date coal production in 2015

Coal production from EIA.gov

Steven Hansen



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