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posted on 07 October 2016

Rail Week Ending 01 October 2016: September Loadings Down 4.8 Percent

Week 39 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. However, the data was marginally better compared to last week.

Analyst Opinion of the Rail Data

We review this data set to understand the economy. If coal and grain are removed from the analysis, rail has recently been declining around 5% - but this week was -3.5%. Under normal circumstances one should consider this recessionary as trucking tonnages are down also. This also correlates to the contraction in manufacturing and the wholesale sectors - so rail is not an outlier.

It does appear that the downward slide in the one year rolling averages will pause shortly as the rate of increase in the rate of decline is continuing to be smaller. But this movement is like watching snails race. Based on the current trends - rail should emerge from year-over-year contraction somewhere around the end of the year.

The contraction in rail counts 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 -4.8 % accelerating accelerating
13 week rolling average -6.1 % accelerating decelerating
52 week rolling average -7.3 % 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 September 2016.

Carload traffic in September totaled 1,068,644 carloads, down 5.4 percent or 61,455 carloads from September 2015. U.S. railroads also originated 1,040,934 containers and trailers in September 2016, down 4.2 percent or 45,192 units from the same month last year. For September 2016, combined U.S. carload and intermodal originations were 2,109,578, down 4.8 percent or 106,647 carloads and intermodal units from September 2015.

In September 2016, nine of the 20 carload commodity categories tracked by the AAR each month saw carload gains compared with September 2015. These included: grain, up 11.2 percent or 9,860 carloads; waste and nonferrous scrap, up 28.8 percent or 3,725 carloads; and nonmetallic minerals, up 7.5 percent or 1,414 carloads. Commodities that saw declines in September 2016 from September 2015 included: coal, down 13.1 percent or 53,896 carloads; petroleum and petroleum products, down 21.6 percent or 11,810 carloads; and primary metal products, down 9.5 percent or 3,459 carloads.

Excluding coal, carloads were down 1.1 percent or 7,559 carloads in September 2016 from September 2015.

Total U.S. carload traffic for the first 36 weeks of 2016 was 9,737,216 carloads, down 10.5 percent or 1,142,905 carloads, while intermodal containers and trailers were 10,083,612 units, down 3.2 percent or 333,619 containers and trailers when compared to the same period in 2015. For the first nine months of 2016, total rail traffic volume in the United States was 19,820,828 carloads and intermodal units, down 6.9 percent or 1,476,524 carloads and intermodal units from the same point last year.

"Rail traffic in September was more of what we have come to expect this year: big declines in energy related products, continued weakness in intermodal and most other export markets, but with some strength in grain," said AAR Senior Vice President of Policy and Economics John T. Gray. "The fact is, in many of their markets, railroads are facing significant market uncertainties. It isn't helping that rail regulators are seeking to put additional costly regulatory burdens on railroads too. The inefficiencies and unnecessary costs railroads would incur if regulators succeed would make it that much harder for railroads to meet the needs of their customers and to allow the capital investment necessary to adapt their networks to a changing marketplace."

Week Ending October 1, 2016

Total U.S weekly rail traffic for the week ending October 1, 2016 was 549,171 carloads and intermodal units, down 4 percent compared with the same week last year.

Total carloads for the week ending October 1 were 277,157 carloads, down 4.4 percent compared with the same week in 2015, while U.S. weekly intermodal volume was 272,014 containers and trailers, down 3.5 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 10.6 percent to 27,626 carloads; motor vehicles and parts, up 6.2 percent to 19,755 carloads; and metallic ores and metals, up 3.8 percent to 22,524 carloads. Commodity groups that posted decreases compared with the same week in 2015 included miscellaneous carloads, down 25 percent to 9,611 carloads; petroleum and petroleum products, down 22.2 percent to 10,320 carloads; and coal, down 10.3 percent to 91,943 carloads.

For the first 39 weeks of 2016, U.S. railroads reported cumulative volume of 9,737,216 carloads, down 10.5 percent from the same point last year; and 10,083,612 intermodal units, down 3.2 percent from last year. Total combined U.S. traffic for the first 39 weeks of 2016 was 19,820,828 carloads and intermodal units, a decrease of 6.9 percent compared to last year.

Coal is over 1/3 of the total railcar count, and this week the EIA says coal production is 6.7 % 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 -4.4 % -3.5 % -4.0 %
Ignoring coal and grain -3.5 %
Year Cumulative to Date -10.5 % -3.2 % -6.9 %

[click on graph below to enlarge]

Current Rail Chart:

z rail1.png

For the week ended October 1, 2016

  • Estimated U.S. coal production totaled approximately 16.7 million short tons (mmst)
  • This production estimate is 6.5% higher than last week's estimate and 6.7% lower than the production estimate in the comparable week in 2015
  • East of the Mississippi River coal production totaled 6.3 mmst
  • West of the Mississippi River coal production totaled 10.5 mmst
  • U.S. year-to-date coal production totaled 540.5 mmst, 21.9% lower than the comparable year-to-date coal production in 2015

Coal production from

Steven Hansen

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