Written by Steven Hansen
Week 3 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. The intuitive sectors this week improve but remain in 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) declined 1.4 % 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 -5.6 % to -4.2 %.
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 | -8. % | improving |
| 13 week rolling average | -8.3 % | improving |
| 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 499,732 carloads and intermodal units, down 8 percent compared with the same week last year.
Total carloads for the week ending January 18 were 237,394 carloads, down 8.4 percent compared with the same week in 2019, while U.S. weekly intermodal volume was 262,338 containers and trailers, down 7.7 percent compared to 2019.
Three of the 10 carload commodity groups posted an increase compared with the same week in 2019. They were miscellaneous carloads, up 903 carloads, to 10,242; metallic ores and metals, up 827 carloads, to 21,616; and chemicals, up 649 carloads, to 32,478. Commodity groups that posted decreases compared with the same week in 2019 included coal, down 17,651 carloads, to 70,388; grain, down 3,631 carloads, to 19,373; and petroleum and petroleum products, down 978 carloads, to 12,730.
For the first three weeks of 2020, U.S. railroads reported cumulative volume of 692,077 carloads, down 7.4 percent from the same point last year; and 723,293 intermodal units, down 8.1 percent from last year. Total combined U.S. traffic for the first three weeks of 2020 was 1,415,370 carloads and intermodal units, a decrease of 7.8 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 | -8.4 % | -7.7 % | -8.0 % |
| — Ignoring coal, grain & petroleum | -1.4 % | ||
| Year Cumulative to Date | -7.4 % | -8.1 % | -7.8 % |
[click on the graph below to enlarge]
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