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posted on 09 February 2018

Rail Week Ending 03 February 2018: Rail Up 0.1% In January

Week 5 of 2018 shows same week total rail traffic (from same week one year ago) improved according to the Association of American Railroads (AAR) traffic data. The rolling averages are mixed.

Analyst Opinion of the Rail Data

We review this data set to understand the economy. If coal and grain are removed from the analysis for carloads, this week it expanded 0.0 %. We primarily use rolling averages the analyze the data due to weekly volatility.

Intermodal transport again strongly expanded year-over-year this week.

The following graph compares the four week moving averages for the rail economically intuitive sectors (red line) vs. total movements (blue 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 -1.8 % accelerating decelerating
13 week rolling average +1.2 % accelerating accelerating
52 week rolling average +3.2 % accelerating decelerating

A summary of the data from the AAR:

U.S. railroads originated 1,217,405 carloads in January 2018, down 3.4 percent, or 42,431 carloads, from January 2017. U.S. railroads also originated 1,310,141 containers and trailers in January 2018, up 3.5 percent, or 44,183 units, from the same month last year. Combined U.S. carload and intermodal originations in January 2018 were 2,527,546, up 0.1 percent, or 1,752 carloads and intermodal units from January 2017.

In January 2018, eight of the 20 carload commodity categories tracked by the AAR each month saw carload gains compared with January 2017. These included: crushed stone, sand & gravel, up 3,498 carloads or 3.8 percent; petroleum & petroleum products, up 3,196 carloads or 6.4 percent; and lumber & wood products, up 1,167 carloads or 8.0 percent. Commodities that saw declines in January 2018 from January 2017 included: coal, down 25,083 carloads or 5.8 percent; motor vehicles & parts, down 8,372 carloads or 10.1 percent; and grain, down 6,917 carloads or 5.8 percent.‚Äč

"Recent stock market gyrations remind all of us that, when it comes to things related to the economy, conditions can change quickly. For now, though, rail volumes are not flashing strong warning signs," said AAR Senior Vice President John T. Gray. "In January, intermodal picked up where it left off last year, when it set a new annual record, and several carload categories showed gains for the month. To be sure, we could do without January's sharp fall in motor vehicle and coal carloads, among others, but we're hopeful that the basic economy remains on a firm footing and that the recent turmoil in the markets simply represents an adjustment to potential interest rate changes."

Excluding coal, carloads were down 17,348 carloads, or 2.1 percent, in January 2018 from January 2017. Excluding coal and grain, carloads were down 10,431 carloads, or 1.5 percent.

Week Ending February 3, 2018

Total U.S. weekly rail traffic was 547,993 carloads and intermodal units, up 2.5 percent compared with the same week last year.

Total carloads for the week ending February 3 were 265,157 carloads, down 1.4 percent compared with the same week in 2017, while U.S. weekly intermodal volume was 282,836 containers and trailers, up 6.3 percent compared to 2017.

Five of the 10 carload commodity groups posted an increase compared with the same week in 2017. They included metallic ores and metals, up 1,147 carloads, to 20,984; nonmetallic minerals, up 773 carloads, to 32,690; and chemicals, up 736 carloads, to 33,443. Commodity groups that posted decreases compared with the same week in 2017 included coal, down 2,796 carloads, to 89,644; motor vehicles and parts, down 2,354 carloads, to 16,329; and farm products excl. grain, and food, down 1,176 carloads, to 16,165.

Coal is over 1/3 of the total railcar count, and this week the EIA says coal production is 5.2 % lower than the production estimate in the comparable week in 2017.

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 -1.4% +6.3 % +2.5 %
Ignoring coal and grain +0.0 %
Year Cumulative to Date -3.4 % +3.5 % +0.1 %

[click on graph below to enlarge]

z rail1.png

For the week ended February 3, 2018

  • Estimated U.S. coal production totaled approximately 15.9 million short tons (mmst)
  • This production estimate is 3.5% higher than last week's estimate and 5.2% lower than the production estimate in the comparable week in 2017
  • East of the Mississippi River coal production totaled 6.5 mmst
  • West of the Mississippi River coal production totaled 9.4 mmst
  • U.S. year-to-date coal production totaled 69.9 mmst, 7.9% lower than the comparable year-to-date coal production in 2017

Steven Hansen

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