Written by Steven Hansen
Week 13 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 worsened this week but still in the range seen over the last year. Intermodal continues to worsen due to the logistic headwinds of the coronavirus.
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. Whilst container exports from China are now recovering, container exports from the U.S. continues to slow. The rate of growth of rail had been improving (even though it was in contraction) – and now rail is sliding deeper into contraction. The effects of coronavirus will continue to slow rail.
We review this data set to understand the economy. The intuitive sectors (total carloads removing coal, grain, and petroleum) contracted 12.1 % year-over-year for this week [unchanged from 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 improved from -1.6 % to -4.1 %.
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 | -9.2 % | worsening |
| 13 week rolling average | -7.5 % | worsening |
| 52 week rolling average | -6.4 % | worsening |
A summary for this week from the AAR:
U.S. railroads originated 899,673 carloads in March 2020, down 6 percent, or 57,148 carloads, from March 2019. U.S. railroads also originated 935,380 containers and trailers in March 2020, down 12.2 percent, or 130,461 units, from the same month last year. Combined U.S. carload and intermodal originations in March 2020 were 1,835,053, down 9.3 percent, or 187,609 carloads and intermodal units from March 2019.
In March 2020, 10 of the 20 carload commodity categories tracked by the AAR each month saw carload gains compared with March 2019. These included: chemicals, up 5,881 carloads or 4.6 percent; all other carloads, up 2,108 carloads or 9.5 percent; and petroleum & petroleum products, up 1,688 carloads or 3.5 percent. Commodities that saw declines in March 2020 from March 2019 included: coal, down 43,611 carloads or 15.9 percent; motor vehicles & parts, down 11,053 carloads or 15.9 percent; and crushed stone, sand & gravel, down 10,482 carloads or 12 percent.
“Rail traffic numbers confirm that the coronavirus is taking a toll on the economy,” said AAR Senior Vice President John T. Gray. “For example, U.S. carloads of autos and auto parts last week were down 70% from the same week last year as auto production declined to zero and consumer spending has begun to shrink demand. While intermodal volume last week was down year-over-year 14% overall, total movements for the five railroads serving the West Coast ports remained steady for a fifth consecutive week, reinforcing the expectation that we may have seen the bottoming of the Asia-North America trade. However, this week also reminded us that the recent collapse in oil prices is hurting rail shipments of petroleum products, frac sand, and steel products.
“While there remain more unknowns than knowns about the next few months, there are tidbits of encouraging news. For example, year-over-year carloads of grain were up in March for the first time in a year and March was the best month for rail chemical carloads in two years.
“In this time of crisis, many people deserve our praise and respect. Our health care professionals, who are on the front lines risking their own lives to save the lives of others, are at the top of that list. But we should also remember that behind the scenes, transportation and logistics providers – railroad, maritime and air cargo operating personnel, truckers, warehouse workers, delivery personnel – are also working tirelessly to supply the goods that we simply could not live without.”
Excluding coal, carloads were down 13,537 carloads, or 2 percent, in March 2020 from March 2019. Excluding coal and grain, carloads were down 15,181 carloads, or 2.5 percent.
Total U.S. carload traffic for the first three months of 2020 was 2,993,051 carloads, down 6.3 percent, or 202,755 carloads, from the same period last year; and 3,178,285 intermodal units, down 8.6 percent, or 298,297 containers and trailers, from last year.
Total combined U.S. traffic for the first 13 weeks of 2020 was 6,171,336 carloads and intermodal units, a decrease of 7.5 percent compared to last year.
Week Ending March 28, 2020
Total U.S. weekly rail traffic was 449,767 carloads and intermodal units, down 11.8 percent compared with the same week last year.
Total carloads for the week ending March 28 were 219,844 carloads, down 9.1 percent compared with the same week in 2019, while U.S. weekly intermodal volume was 229,923 containers and trailers, down 14.2 percent compared to 2019.
Two of the 10 carload commodity groups posted an increase compared with the same week in 2019. They were farm products excl. grain, and food, up 348 carloads, to 16,027; and coal, up 34 carloads, to 60,983. Commodity groups that posted decreases compared with the same week in 2019 included motor vehicles and parts, down 12,379 carloads, to 5,423; nonmetallic minerals, down 3,333 carloads, to 31,159; and metallic ores and metals, down 2,432 carloads, to 20,875.
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 | -9.1 % | -14.2 % | -11.8 % |
| — Ignoring coal, grain & petroleum | -12.8 % | ||
| Year Cumulative to Date | -6.3 % | -8.6 % | -7.5 % |
[click on the graph below to enlarge]
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