Written by Steven Hansen
Week 40 of 2020 shows same week total rail traffic (from same week one year ago) improved 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 slowly recovering from the coronavirus pandemic.
Analyst Opinion of the Rail Data
Total rail traffic has two components – carloads and intermodal (containers or trailers on rail cars). Container exports from China are now recovering, container exports from the U.S. declined and remains deep in contraction. This week again intermodal continued in expansion year-over-year and continues on a strengthening trendline.
However, carloads remain deep in contraction.
But overall, rail is on an improving trendline.
We review this data set to understand the economy. The intuitive sectors (total carloads removing coal, grain, and petroleum) contracted 5.1 % 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 was unchanged at -9.5 %.
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 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] ).
| Percent current rolling average change from the rolling average of one year ago | Trend Direction | |
| 4 week rolling average | -3.2 % | declining |
| 13 week rolling average | -5.6 % | improving |
| 52 week rolling average | -10.0 % | improving |
A summary for this week from the AAR:
The Association of American Railroads (AAR) today reported U.S. rail traffic for the week ending October 3, 2020, as well as volumes for September 2020.
U.S. railroads originated 1,119,546 carloads in September 2020, down 9.7 percent, or 119,909 carloads, from September 2019. U.S. railroads also originated 1,423,883 containers and trailers in September 2020, up 7.1 percent, or 94,351 units, from the same month last year. Combined U.S. carload and intermodal originations in September 2020 were 2,543,429, down 1 percent, or 25,558 carloads and intermodal units from September 2019.
In September 2020, eight of the 20 carload commodity categories tracked by the AAR each month saw carload gains compared with September 2019. These included: grain, up 25,705 carloads or 27.8 percent; iron & steel scrap, up 2,021 carloads or 12.2 percent; and grain mill products, up 1,978 carloads or 4.7 percent. Commodities that saw declines in September 2020 from September 2019 included: coal, down 95,400 carloads or 24.2 percent; crushed stone, sand & gravel, down 23,542 carloads or 20.9 percent; and chemicals, down 8,904 carloads or 5.6 percent.
“September 2020 was the fourth best intermodal month in history for U.S. railroads, as retailers and others restocked their inventories and prepared for the holiday season,” said AAR Senior Vice President John T. Gray. “Meanwhile, rail carloads, which don’t include intermodal, remained down in September compared with last year, but showed marked improvement compared to a few months ago, especially if you exclude coal. In the meantime, railroads remain focused on keeping their employees safe while delivering the goods our nation needs.”
Excluding coal, carloads were down 24,509 carloads, or 2.9 percent, in September 2020 from September 2019. Excluding coal and grain, carloads were down 50,214 carloads, or 6.7 percent.
Total U.S. carload traffic for the first nine months of 2020 was 8,567,803 carloads, down 15.3 percent, or 1,543,431 carloads, from the same period last year; and 10,034,360 intermodal units, down 5.9 percent, or 623,634 containers and trailers, from last year.
Total combined U.S. traffic for the first 40 weeks of 2020 was 18,602,163 carloads and intermodal units, a decrease of 10.4 percent compared to last year.
Week Ending October 3, 2020
Total U.S. weekly rail traffic was 518,761 carloads and intermodal units, up 0.8 percent compared with the same week last year.
Total carloads for the week ending October 3 were 232,273 carloads, down 5.9 percent compared with the same week in 2019, while U.S. weekly intermodal volume was 286,488 containers and trailers, up 6.9 percent compared to 2019.
Five of the 10 carload commodity groups posted an increase compared with the same week in 2019. They included grain, up 6,857 carloads, to 26,534; metallic ores and metals, up 2,799 carloads, to 21,669; and miscellaneous carloads, up 1,097 carloads, to 10,766. Commodity groups that posted decreases compared with the same week in 2019 included coal, down 18,074 carloads, to 58,722; nonmetallic minerals, down 4,496 carloads, to 30,483; and petroleum and petroleum products, down 2,159 carloads, to 10,428.
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 | -5.9 % | +6.9 % | +0.8 % |
| — Ignoring coal, grain & petroleum | -5.1 % | ||
| Year Cumulative to Date | -15.3 % | -5.9 % | -10.4 % |
[click on the graph below to enlarge]
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