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posted on 08 September 2017

Rail Week Ending 02 September 2017: August Was The Best Month In History For Intermodal

Week 35 of 2017 shows same week total rail traffic (from same week one year ago) contracted according to the Association of American Railroads (AAR) traffic data. The economically intuitive sectors are in contraction, whilst the intuitive rolling averages are now in contraction.

Analyst Opinion of the Rail Data

This week rail was negatively impacted by Hurricane Harvey.

We review this data set to understand the economy. If coal and grain are removed from the analysis, this week it contracted 9.2 % (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 13th week after contraction beginning in late 2015.

The strength this week again 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 remained below the zero growth line for the seventh 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 +2.1 % decelerating decelerating
13 week rolling average +3.2 % decelerating decelerating
52 week rolling average +2.6 % accelerating accelerating

A summary of the data from the AAR:

U.S. railroads originated 1,343,405 carloads in August 2017, decreased 0.3 percent, or 4,571 carloads, from August 2016. U.S. railroads also originated 1,401,081 containers and trailers in August 2017, up 5.6 percent, or 73,790 units, from the same month last year. Combined U.S. carload and intermodal originations in August 2017 were 2,744,486, up 2.6 percent, or 69,219 carloads and intermodal units, from August 2016.

In August 2017, seven of the 20 carload commodity categories tracked by the AAR each month saw carload gains compared with August 2016. These included: coal, up 25,926 carloads or 5.8 percent; crushed stone, sand & gravel, up 14,506 carloads or 12.1 percent; and metallic ores, up 4,550 carloads or 16.1 percent. Commodities that saw declines in August 2017 from August 2016 included: grain, down 24,565 carloads or 20.4 percent; motor vehicles & parts, down 10,321 carloads or 11.2 percent; and petroleum & petroleum products, down 8,362 carloads or 15.8 percent.

"Rail traffic in August was a mixed bag, with gains in coal and sand, among other commodities, offset by declines in grain, autos, and crude oil," said AAR Senior Vice President John T. Gray. "These results reflect the fact that different rail customer segments are always facing different market dynamics, including, during the last week of August, Hurricane Harvey."

Regarding Hurricane Harvey, Gray said, "Unfortunately, floods, tornadoes, and hurricanes are a fact of life, and railroads have long experience dealing with them and their aftermath. Railroads know that the quicker they can safely restore service, the quicker affected communities can obtain food, water, and other necessities; that supplies needed for rebuilding can be brought in; that debris can be removed; and that rail customers can return their operations to normal. In this regard, for railroads there is no alternative to long hours of very hard work in very difficult conditions, and that's what railroads have been putting in."

Excluding coal, carloads were down 30,497 carloads, or 3.4 percent, in August 2017 from August 2016. Excluding coal and grain, carloads were down 5,932 carloads, or 0.8 percent.

Total U.S. carload traffic for the first eight months of 2017 was 9,062,097 carloads, up 4.5 percent, or 393,428 carloads, from the same period last year; and 9,352,108 intermodal units, up 3.4 percent, or 309,302 containers and trailers, from last year.

Total combined U.S. traffic for the first 35 weeks of 2017 was 18,414,205 carloads and intermodal units, an increase of 4 percent compared to last year.

Week Ending September 2, 2017

Total U.S. weekly rail traffic was 534,140 carloads and intermodal units, down 0.9 percent compared with the same week last year.

Total carloads for the week ending September 2 were 257,077 carloads, down 5.9 percent compared with the same week in 2016, while U.S. weekly intermodal volume was 277,063 containers and trailers, up 4.2 percent compared to 2016.

Three of the 10 carload commodity groups posted an increase compared with the same week in 2016. They were coal, up 4,017 carloads, to 94,510; nonmetallic minerals, up 941 carloads, to 36,696; and metallic ores and metals, up 878 carloads, to 23,028. Commodity groups that posted decreases compared with the same week in 2016 included chemicals, down 6,756 carloads, to 24,993; grain, down 6,249 carloads, to 18,206; and petroleum and petroleum products, down 3,146 carloads, to 7,640.

Coal is over 1/3 of the total railcar count, and this week the EIA says coal production is 5.2 % 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 -5.9 % +4.2 % -0.9 %
Ignoring coal and grain-0.4 -9.2 %
Year Cumulative to Date +4.5 % +3.4 % +4.0 %

[click on graph below to enlarge]

z rail1.png

For the week ended September 2, 2017

  • Estimated U.S. coal production totaled approximately 16.4 million short tons (mmst)
  • This production estimate is 1.9% lower than last week's estimate and 5.2% higher than the production estimate in the comparable week in 2016
  • East of the Mississippi River coal production totaled 6.1 mmst
  • West of the Mississippi River coal production totaled 10.3 mmst
  • U.S. year-to-date coal production totaled 532.5 mmst, 13.7% higher than the comparable year-to-date coal production in 2016

Coal production from EIA.gov

Steven Hansen



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