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posted on 21 July 2017

Rail Week Ending 15 July 2017: Economic Intuitive Slowing Continues

Week 28 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 grew 0.6 % (meaning that the predicitive economic elements grew 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 seventh week after contraction beginning in late 2015.

The strength this week was intermodal - which is economically positive (and is contrary to the slowness of the economically intuitive carload counts).

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 - but this week it remained below the zero growth line for the second week..

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 +3.4 % decelerating decelerating
13 week rolling average +5.2 % unchanged accelerating
52 week rolling average +1.4 % accelerating accelerating

A summary of the data from the AAR:

For this week, total U.S. weekly rail traffic was 540,005 carloads and intermodal units, up 3.8 percent compared with the same week last year.

Total carloads for the week ending July 15 were 262,869 carloads, up 0.3 percent compared with the same week in 2016, while U.S. weekly intermodal volume was 277,136 containers and trailers, up 7.4 percent compared to 2016.

Five of the 10 carload commodity groups posted an increase compared with the same week in 2016. They included nonmetallic minerals, up 14.3 percent to 40,764 carloads; farm products excl. grain, and food, up 4.1 percent to 16,567 carloads; and forest products, up 3.2 percent to 10,205 carloads. Commodity groups that posted decreases compared with the same week in 2016 included petroleum and petroleum products, down 16.8 percent to 9,337 carloads; motor vehicles and parts, down 12.5 percent to 12,299 carloads; and grain, down 10.9 percent to 22,802 carloads.

For the first 28 weeks of 2017, U.S. railroads reported cumulative volume of 7,191,823 carloads, up 6.0 percent from the same point last year; and 7,393,388 intermodal units, up 2.9 percent from last year. Total combined U.S. traffic for the first 28 weeks of 2017 was 14,585,211 carloads and intermodal units, an increase of 4.4 percent compared to last year.

Coal is over 1/3 of the total railcar count, and this week the EIA says coal production is 25.8 % 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 +0.3 % +7.4 % +3.8 %
Ignoring coal and grain +0.6 %
Year Cumulative to Date +6.0 % +2.9 % +4.4 %

[click on graph below to enlarge]

z rail1.png

For the week ended July 15, 2017

  • Estimated U.S. coal production totaled approximately 15.3 million short tons (mmst)
  • This production estimate is 13.5% higher than last week's estimate and 25.8% higher than the production estimate in the comparable week in 2016
  • East of the Mississippi River coal production totaled 5.6 mmst
  • West of the Mississippi River coal production totaled 9.6 mmst
  • U.S. year-to-date coal production totaled 418.1 mmst, 15.5% higher than the comparable year-to-date coal production in 2016

Coal production from

Steven Hansen

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