Written by Steven Hansen
The September 2012 rail data can be read several ways, but the overall trend seems to show transport is weakening. Even the growth in the “hottest” portion of rail was not as good as previous months, as intermodal is no longer growing at a record pace.
….. year-to-date intermodal volume in 2012 is slightly behind 2006’s record pace. Part of the increase in intermodal volume this year is due to growth in purely domestic movements, but part is also due to containerized imports and exports that have been trending slowly higher in recent years and often move to and from ports by rail.
Two months of soft data is not a trend (but it is getting closer to a trend). Overall, the monthly summary data says:
- carloads down 2.5% year-over-year (compared to down 1.4% last month)
- excluding coal and grain (which are not economically intuitive), carloads in August 2012 were up 3.7% year-over-year.
- intermodal (containers or trailers on railcars) up 2.5% year-over-year (compared to up 4.3% last month).
- total carloads plus intermodal down 0.9% year-over-year (compared to up 1.1% last month).
The Association of American Railroads (AAR) reports this data in three parts:
- intermodal (sea containers or trailers on special railcars)
- total railcars plus intermodal
AAR rail traffic data are reported as carloads or as intermodal units. Carload traffic is classified into one of 20 different commodity categories and is carried in a variety of rail car types (e.g., tank cars, covered hoppers, gondolas, boxcars, etc.). A unit of rail intermodal traffic is either a shipping container (currently about 87% of U.S. rail intermodal traffic) or a truck trailer (about 13%) carried on a railroad flat car. Intermodal is not included in carload figures. Commodity detail on the freight inside the container or trailer is not available.
Econintersect uses rail movements to add to understanding of possible economic dynamics in coming months – as rail movements come months before retail sales. In any analysis, several good conclusions can be cut from the same data set. Overall, I believe rail softened in September. First, a look at rail car loadings.
From the rail car loadings, the following graph was prepared by the AAR:
As coal and grain comprises well over half of all commodities transported, and coal / grain have major demand fluctuations unassociated with the economy – the below graph removes coal and grain from the equation.
Removing coal and grain, one could draw a conclusion that the industrial portion of the economy is in a two month uptrend – and this portion of the economy is strengthening.
Most finished consumer goods which travel on rail move in intermodal units, containers and trailers, on rail cars. If there was only one pulse point to watch – it is this one. A caveat here: this needs to be viewed with trucking data to get a complete picture – as this same service is provided by both modes of transport. Here we see a three month down trend – and my conclusion is the consumer portion of the economy is cooling off:
The graphic below compares non-seasonally adjusted total rail movements (total car loads including coal and grain, and adds intermodal) year-over-year.
The problem with the above graphic is that it is not based on value of items being shipped – only on car count equivalents (because it mixes apples and oranges – commodities and containers). Further, it includes non-economic components. If one can believe all things are equal – this total rail transport is in a two month downtrend.
Rail is among the first reporters of September 2012 data. So far other major transport indicators are mixed but the transport data overall is showing weak growth:
- Truck Transport (August 2012): Down 0.9% month-over-month, 3.2% year-over-year
- Rail (September 2012): Down 0.9 % year-over-year
- Rail (August 2012) Up 1.1% year-over-year
- Container Counts (August 2012): exports down 0.7% year-over-year, while imports are down 3.9%
For container counts, only import counts are economically intuitive. Using transport as an economic barometer – the real economic growth in the USA seems to be barely positive.