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posted on 07 July 2017

Rail Week Ending 01 July 2017: Total June Traffic Up 4.5%

Week 26 of 2017 shows same week total rail traffic (from same week one year ago) improved according to the Association of American Railroads (AAR) traffic data. The economically intuitive sectors slowing continues.

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 over the last 6 months been declining around 5% - but this week it declined 1.8 % (meaning that the predicitive economic elements declined year-over-year). Also consider total rail movements are below 2015 levels - even though they are above 2016 levels. This week the one year rolling averages continue in expansion for the fourth week after contraction beginning in late 2015.

The following graph compares the four week moving averages for the rail economically intuitive sectors (red line) vs. total movements (blue line): Rail's intuitive sectors have been bouncing around the zero growth line for most of 2017 but have recently moved above the zero growth line - and this week it returned to the zero growth line..

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 [including coal and grain] 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 +6.2 % accelerating decelerating
13 week rolling average +5.8 % accelerating decelerating
52 week rolling average +0.9 % accelerating decelerating

A summary of the data from the AAR:

U.S. railroads originated 1,065,976 carloads in June 2017, up 4.4 percent, or 45,174 carloads, from June 2016. U.S. railroads also originated 1,113,575 containers and trailers in June 2017, up 4.6 percent, or 49,425 units, from the same month last year. Combined U.S. carload and intermodal originations in June 2017 were 2,179,551, up 4.5 percent, or 94,599 carloads and intermodal units, from June 2016.

In June 2017, eight of the 20 carload commodity categories tracked by the AAR each month saw carload gains compared with June 2016. These included: coal, up 40,333 carloads or 13.2 percent; crushed stone, gravel, and sand, up 16,747 carloads or 18.5 percent; and chemicals, up 4,888 carloads or 4.1 percent. Commodities that saw declines in June 2017 from June 2016 included motor vehicles and parts, down 7,168 carloads or 9.5 percent; petroleum & petroleum products, down 6,724 carloads or 15.2 percent; and metallic ores, down 2,025 carloads or 7.7 percent.

"Rail traffic indicators of the economy remain mixed. While some commodity groups, such as intermodal, chemicals, and crushed stone and sand (driven heavily by frac sand) set new all-time first half records and a few others like grain and coke set post-recession records, several other traffic categories continue to struggle," said AAR Senior Vice President John T. Gray. "All of this indicates an industrial economy that may not yet have a clear direction forward and one that continues to undergo structural change. It is a sign of the reality railroads constantly face: changing markets that are difficult to foresee and plan for."

Excluding coal, U.S. rail carloads were up 4,841 carloads, or 0.7 percent, in June 2017 over June 2016. Excluding coal and grain, carloads were up 3,668 carloads, or 0.6 percent, for the month.

Total U.S. carload traffic for the first six months of 2017 was 6,699,453 carloads, up 6.4 percent, or 404,078 carloads, from the same period last year; and a record 6,892,673 intermodal units, up 2.7 percent, or 179,515 containers and trailers, from last year and up 0.5 percent, or 32,614 units, over the previous record in the first half of 2015.

Total combined U.S. traffic for the first 26 weeks of 2017 was 13,592,126 carloads and intermodal units, an increase of 4.5 percent compared to last year.

Week Ending July 1, 2017

Total U.S. weekly rail traffic was 546,361 carloads and intermodal units, up 3.2 percent compared with the same week last year.

Total carloads for the week ending July 1 were 270,353 carloads, up 2.3 percent compared with the same week in 2016, while U.S. weekly intermodal volume was 276,008 containers and trailers, up 4 percent compared to 2016.

Five of the 10 carload commodity groups posted an increase compared with the same week in 2016. They included coal, up 10.1 percent to 87,750 carloads; nonmetallic minerals, up 9 percent to 39,503 carloads; and chemicals, up 2 percent to 31,851 carloads. Commodity groups that posted decreases compared with the same week in 2016 included petroleum and petroleum products, down 20.8 percent to 8,862 carloads; motor vehicles and parts, down 12 percent to 16,503 carloads; and farm products excl. grain, and food, down 6.1 percent to 16,044 carloads.

Coal is over 1/3 of the total railcar count, and this week the EIA says coal production is 11.3 % higher than the production estimate in the comparable week in 2016.

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 +2.3 % +4.0 % +3.2 %
Ignoring coal and grain -1.8 %
Year Cumulative to Date +6.4 % +2.7 % +4.5 %

[click on graph below to enlarge]

z rail1.png

For the week ended July 1, 2017

  • Estimated U.S. coal production totaled approximately 15.9 million short tons (mmst)
  • This production estimate is 1.7% higher than last week's estimate and 11.3% higher than the production estimate in the comparable week in 2016
  • East of the Mississippi River coal production totaled 6.2 mmst
  • West of the Mississippi River coal production totaled 9.7 mmst
  • U.S. year-to-date coal production totaled 389.4 mmst, 16% higher than the comparable year-to-date coal production in 2016

Coal production from EIA.gov

Steven Hansen



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