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posted on 28 October 2016

Rail Week Ending 22 October 2016 Better Than The Previous Week

Week 42 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. The weekly data was better than 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 -4.6%. This week the one year rolling average did not worsen - but it remains in contraction.

It does appear that the downward slide in the one year rolling average is in the processes of stopping its decline. But this movement is like watching snails race. Based on the current trends - rail year-over-year rate of contraction should start improving by year end.

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 -3.9 % accelerating accelerating
13 week rolling average -4.9 % accelerating accelerating
52 week rolling average -7.3 % decelerating accelerating

A summary of the data from the AAR:

The Association of American Railroads (AAR) today reported U.S. rail traffic for the week ending October 22, 2016.

For this week, total U.S. weekly rail traffic was 544,092 carloads and intermodal units, down 1.7 percent compared with the same week last year.

Total carloads for the week ending October 22 were 268,551 carloads, down 5.8 percent compared with the same week in 2015, while U.S. weekly intermodal volume was 275,541 containers and trailers, up 2.6 percent compared to 2015.

Three of the 10 carload commodity groups posted an increase compared with the same week in 2015. They were miscellaneous carloads, up 16.5 percent to 10,852 carloads; grain, up 4.6 percent to 26,442 carloads; and nonmetallic minerals, up 0.1 percent to 37,324 carloads. Commodity groups that posted decreases compared with the same week in 2015 included petroleum and petroleum products, down 24.4 percent to 10,037 carloads; metallic ores and metals, down 12.3 percent to 19,115 carloads; and coal, down 10.5 percent to 90,272 carloads.

For the first 42 weeks of 2016, U.S. railroads reported cumulative volume of 10,532,634 carloads, down 10.2 percent from the same point last year; and 10,886,011 intermodal units, down 3.1 percent from last year. Total combined U.S. traffic for the first 42 weeks of 2016 was 21,418,645 carloads and intermodal units, a decrease of 6.7 percent compared to last year.

Coal is over 1/3 of the total railcar count, and this week the EIA says coal production is 6.1 % 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 -5.8 % +2.6 % -1.7 %
Ignoring coal and grain -4.6 %
Year Cumulative to Date -10.2 % -3.1 % -6.7 %

[click on graph below to enlarge]

Current Rail Chart:

z rail1.png

For the week ended October 22, 2016

  • Estimated U.S. coal production totaled approximately 16.5 million short tons (mmst)
  • This production estimate is 2.7% higher than last week's estimate and 6.1% lower than the production estimate in the comparable week in 2015
  • East of the Mississippi River coal production totaled 6.1 mmst
  • West of the Mississippi River coal production totaled 10.4 mmst
  • U.S. year-to-date coal production totaled 589.6 mmst, 20.7% lower than the comparable year-to-date coal production in 2015

Coal production from EIA.gov

Steven Hansen



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