Written by Steven Hansen
Week 11 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. The intuitive sector’s rolling average marginally worsened this week but still in the upper end of the range seen over the last year.
Analyst Opinion of the Rail Data
The big decline this week continues to be intermodal (trucks and containers on flatcars) which accounts for half of the rail traffic, Intermodal continues under 2013 levels. The LA ports were shut down today – and intermodal will decline much further.
We review this data set to understand the economy. The intuitive sectors (total carloads removing coal, grain, and petroleum) contracted 2.3 % 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 -2.1 % to -1.7 %.
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 weak and in contraction in 2019. Last week the counts were in expansion but they returned to contraction this week.
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 | -8.5 % | worsening |
| 13 week rolling average | -7.5 % | little changed |
| 52 week rolling average | -6.2 % | little changed |
A summary for this week from the AAR:
For this week, total U.S. weekly rail traffic was 463,017 carloads and intermodal units, down 7.6 percent compared with the same week last year.
Total carloads for the week ending March 14 were 226,039 carloads, down 5.9 percent compared with the same week in 2019, while U.S. weekly intermodal volume was 236,978 containers and trailers, down 9.1 percent compared to 2019.
“Intermodal, rather than other rail sectors, is likely to see the earliest impacts from the coronavirus because large amounts of intermodal traffic go to or come from ports – roughly half of U.S. intermodal is exports or imports,” said AAR Senior Vice President John T. Gray. “Unfortunately, extensive flooding and harsh winter weather last year at this time complicate comparisons between this year and last year. That said, the fact that overall intermodal originations last week were the lowest for the same week since 2013 is strong evidence that the coronavirus is impacting intermodal volumes. This is emphasized by the fact four of the five carriers of intermodal traffic from west coast ports, the principal gateways serving the Chinese trade, saw declines in their intermodal business handled. Similar declines in the East also suggest that the problem has begun to spread to other regions of the supply chain”
Six of the 10 carload commodity groups posted an increase compared with the same week in 2019. They included grain, up 1,288 carloads, to 19,911; motor vehicles and parts, up 1,180 carloads, to 19,104; and petroleum and petroleum products, up 1,164 carloads, to 13,294. Commodity groups that posted decreases compared with the same week in 2019 included coal, down 16,545 carloads, to 55,542; nonmetallic minerals, down 2,468 carloads, to 30,254; and metallic ores and metals, down 992 carloads, to 19,975.
For the first 11 weeks of 2020, U.S. railroads reported cumulative volume of 2,549,159 carloads, down 6.2 percent from the same point last year; and 2,712,444 intermodal units, down 7.8 percent from last year. Total combined U.S. traffic for the first 11 weeks of 2020 was 5,261,603 carloads and intermodal units, a decrease of 7 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 | -5.9 % | -9.1 % | -7.6 % |
| — Ignoring coal, grain & petroleum | -2.3 % | ||
| Year Cumulative to Date | -6.2 % | -7.8 % | -7.0 % |
[click on the graph below to enlarge]
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