Written by Steven Hansen
Week 26 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 mostly in contraction for over one year – and now is taking a hit from coronavirus. The carloads intuitive sector’s rolling average marginally declined this week but remains historically low. Intermodal has a serious contraction due to the logistic headwinds of the coronavirus and marginally declined this week.
Analyst Opinion of the Rail Data
Intermodal and carloads are under Great Recession values. Container exports from China are now recovering, container exports from the U.S. declined and remains deep in contraction.
We review this data set to understand the economy. The intuitive sectors (total carloads removing coal, grain, and petroleum) contracted 16.9 % year-over-year for this week [15.7 % for the previous 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 marginally improved from -17.5 % to -16.8 %.
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):
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Intermodal transport (containers or trailers on rail cars) growth was weak and in contraction in 2019.
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 | -14.3 % | improving |
| 13 week rolling average | -18.8 % | worsening |
| 52 week rolling average | -10.0 % | worsening |
A summary for this week from the AAR:
U.S. railroads originated 794,256 carloads in June 2020, down 22.4 percent, or 228,975 carloads, from June 2019. U.S. railroads also originated 1,004,933 containers and trailers in June 2020, down 6.6 percent, or 70,994 units, from the same month last year. Combined U.S. carload and intermodal originations in June 2020 were 1,799,189, down 14.3 percent, or 299,969 carloads and intermodal units from June 2019.
In June 2020, two of the 20 carload commodity categories tracked by the AAR each month saw carload gains compared with June 2019. These were all other carloads, up 585 carloads or 2.4 percent; and farm products excl. grain, up 326 carloads or 11.1 percent. Commodities that saw declines in June 2020 from June 2019 were coal, down 104,576 carloads or 34.1 percent; crushed stone, sand & gravel, down 26,659 carloads or 27.1 percent; and motor vehicles & parts, down 20,500 carloads or 30.3 percent.
“June was a month in which the slow recovery process that began in early May, began to accelerate,” said AAR Senior Vice President John T. Gray. “By the end of June, freight loadings had improved by about 60,000 carload and intermodal units weekly over where they had been in late April. After recording record lows in early May, coal finally stabilized at about 50,000 carloads per week by the end of June. Additionally, the reopening of automotive plants that began in early June has regrown that business from as little as 2,000 weekly loads to over 13,000 by the end of the month. This also contributed to stabilization for loadings of products that support auto production such as metals, glass and plastics. However, leading the way upward was the intermodal business which, over the last two months, grew to match volumes last seen around the first of February. While all of these results are encouraging they will be much more robust if the current trend continues in the weeks following the July 4th holiday.”
Excluding coal, carloads were down 124,399 carloads, or 17.4 percent, in June 2020 from June 2019. Excluding coal and grain, carloads were down 120,284 carloads, or 19.1 percent.
Total U.S. carload traffic for the first six months of 2020 was 5,508,013 carloads, down 15.9 percent, or 1,044,388 carloads, from the same period last year; and 6,191,563 intermodal units, down 10.6 percent, or 732,697 containers and trailers, from last year.
Total combined U.S. traffic for the first 26 weeks of 2020 was 11,699,576 carloads and intermodal units, a decrease of 13.2 percent compared to last year.
Week Ending June 27, 2020
Total U.S. weekly rail traffic was 459,449 carloads and intermodal units, down 13.8 percent compared with the same week last year.
Total carloads for the week ending June 27 were 201,502 carloads, down 22.9 percent compared with the same week in 2019, while U.S. weekly intermodal volume was 257,947 containers and trailers, down 5.1 percent compared to 2019.
None of the 10 carload commodity groups posted an increase compared with the same week in 2019. Commodity groups that posted decreases compared with the same week in 2019 included coal, down 27,574 carloads, to 50,961; metallic ores and metals, down 8,813 carloads, to 15,077; and nonmetallic minerals, down 8,372 carloads, to 29,393.
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 | -22.9 % | -5.1 % | -13.8 % |
| — Ignoring coal, grain & petroleum | -16.9 % | ||
| Year Cumulative to Date | -15.9 % | -10.6 % | -13.2 % |
[click on the graph below to enlarge]
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