Written by Steven Hansen
Week 39 of 2019 shows same week total rail traffic (from same week one year ago) contracted according to the Association of American Railroads (AAR) traffic data. The economically intuitive sectors rolling averages remain in contraction – and declined.
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 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 worsened from -4.3 % to -4.7 %.
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 relatively strong until the beginning of 2019 – and now the year-to-date growth is deep in contraction.
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 | -6.4 % | worsening |
| 13 week rolling average | -5.6 % | worsening |
| 52 week rolling average | -2.6 % | worsening |
A summary for this week from the AAR:
U.S. railroads originated 992,542 carloads in September 2019, down 7 percent, or 74,172 carloads, from September 2018. U.S. railroads also originated 1,061,483 containers and trailers in September 2019, down 5.9 percent, or 65,989 units, from the same month last year. Combined U.S. carload and intermodal originations in September 2019 were 2,054,025, down 6.4 percent, or 140,161 carloads and intermodal units from September 2018.
In September 2019, six of the 20 carload commodity categories tracked by the AAR each month saw carload gains compared with September 2018. These included: stone, clay & glass products, up 1,110 carloads or 3.4 percent; nonmetallic minerals, up 944 carloads or 5.9 percent; and primary forest products, up 429 carloads or 10.1 percent. Commodities that saw declines in September 2019 from September 2018 included: coal, down 30,361 carloads or 8.7 percent; grain, down 13,684 carloads or 15.8 percent; and crushed stone, sand & gravel, down 7,328 carloads or 7.5 percent.
“In 2019, railroads are facing multi-pronged challenges,” said AAR Senior Vice President John T. Gray. “Fundamental long-term structural changes — including the continued erosion of coal markets; growth in the domestic intermodal and chemical sectors; and the current disruptions to manufacturing, agricultural, and international intermodal markets stemming from trade uncertainty and the evolution of consumer purchasing practices — have all required adaptation and renewed focus on basic railroad management and operational principles. That said, the industry’s ultimate goal will remain what it’s always been: providing safe, cost-effective transportation that meets the evolving demands of our customers’ markets, now and in the future.”
Excluding coal, carloads were down 43,811 carloads, or 6.1 percent, in September 2019 from September 2018. Excluding coal and grain, carloads were down 30,127 carloads, or 4.8 percent.
Total U.S. carload traffic for the first nine months of 2019 was 9,864,246 carloads, down 3.8 percent, or 384,418 carloads, from the same period last year; and 10,389,926 intermodal units, down 4.1 percent, or 441,953 containers and trailers, from last year.
Total combined U.S. traffic for the first 39 weeks of 2019 was 20,254,172 carloads and intermodal units, a decrease of 3.9 percent compared to last year.
Week Ending September 28, 2019
Total U.S. weekly rail traffic was 529,336 carloads and intermodal units, down 7.4 percent compared with the same week last year.
Total carloads for the week ending September 28 were 250,450 carloads, down 7.9 percent compared with the same week in 2018, while U.S. weekly intermodal volume was 278,886 containers and trailers, down 6.9 percent compared to 2018.
Two of the 10 carload commodity groups posted an increase compared with the same week in 2018. They were miscellaneous carloads, up 139 carloads, to 10,427; and petroleum and petroleum products, up 119 carloads, to 12,245. Commodity groups that posted decreases compared with the same week in 2018 included coal, down 10,252 carloads, to 79,066; metallic ores and metals, down 4,641 carloads, to 21,232; and grain, down 3,880 carloads, to 17,937.
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 | -7.9 % | -6.9 % | -7.4 % |
| — Ignoring coal, grain & petroleum | -5.1 % | ||
| Year Cumulative to Date | -3.8 % | -4.1 % | -3.9 % |
[click on the graph below to enlarge]
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