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posted on 21 February 2020

Rail Week Ending 15 February 2020 - Intuitive Sectors Return to Contraction

Written by Steven Hansen

Week 7 of 2020 shows same week total rail traffic (from same week one year ago) contracted according to the Association of American Railroads (AAR) traffic data. Total rail traffic has been in contraction for the last year. The intuitive sector's rolling average declined this week and returned to contraction.

Analyst Opinion of the Rail Data

We review this data set to understand the economy. The intuitive sectors (total carloads removing coal, grain, and petroleum) contracted 3.9 % year-over-year for this week. We primarily use rolling averages to analyze the intuitive data due to weekly volatility - and the 4 week rolling year-over-year average for the intuitive sectors improved from 0.0 % to -0.6 %.

When rail contracts, it suggests a slowing of the economy.

The following graph compares the four-week moving averages for carload economically intuitive sectors (red line) vs. total movements (blue line):


Intermodal transport (containers or trailers on rail cars) growth was weak and in contraction in 2019. Last week the counts were in expansion but they returned to contraction this 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 the 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 change from the rolling average of one year ago Trend Direction
4 week rolling average -5.1 % worsening
13 week rolling average -7.5 % worsening
52 week rolling average -5.8 % worsening

A summary for this week from the AAR:

For this week, total U.S. weekly rail traffic was 479,137 carloads and intermodal units, down 8.6 percent compared with the same week last year.

Total carloads for the week ending February 15 were 227,447 carloads, down 9.1 percent compared with the same week in 2019, while U.S. weekly intermodal volume was 251,690 containers and trailers, down 8 percent compared to 2019.

Four of the 10 carload commodity groups posted an increase compared with the same week in 2019. They included petroleum and petroleum products, up 734 carloads, to 12,622; motor vehicles and parts, up 700 carloads, to 17,583; and metallic ores and metals, up 582 carloads, to 20,859. Commodity groups that posted decreases compared with the same week in 2019 included coal, down 17,147 carloads, to 63,045; nonmetallic minerals, down 3,614 carloads, to 28,381; and grain, down 2,973 carloads, to 18,325.

For the first seven weeks of 2020, U.S. railroads reported cumulative volume of 1,625,296 carloads, down 6.1 percent from the same point last year; and 1,749,983 intermodal units, down 6.3 percent from last year. Total combined U.S. traffic for the first seven weeks of 2020 was 3,375,279 carloads and intermodal units, a decrease of 6.2 percent compared to last year.

The middle row in the table below removes coal, grain, and petroleum from the changes in the railcar counts as these commodities are not economically intuitive.

This Week Carloads Intermodal Total
This week Year-over-Year -9.1 % +8.0 % -8.6 %
-- Ignoring coal, grain & petroleum -3.9 %
Year Cumulative to Date -6.1 % -6.3 % -6.2 %

[click on the graph below to enlarge]

z rail1.png

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