Written by Steven Hansen
Week 17 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 – and now is taking a hit from coronavirus. The intuitive sector’s rolling average again worsened this week and now is historically low. Intermodal continues to worsen due to the logistic headwinds of the coronavirus.
Analyst Opinion of the Rail Data
Intermodal and carloads are 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 before the coronavirus (even though it was in contraction) – and now the coronavirus is driving rail 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 20.3 % year-over-year for this week [19.6 % for 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 declined from -16.2 % to -18.1 %.
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 | -20.8 % | worsening |
| 13 week rolling average | -11.7 % | worsening |
| 52 week rolling average | -7.8 % | worsening |
A summary for this week from the AAR:
For this week, total U.S. weekly rail traffic was 414,123 carloads and intermodal units, down 22.4 percent compared with the same week last year.
Total carloads for the week ending April 25 were 192,110 carloads, down 28.2 percent compared with the same week in 2019, while U.S. weekly intermodal volume was 222,013 containers and trailers, down 16.5 percent compared to 2019.
One of the 10 carload commodity groups posted an increase compared with the same week in 2019. It was miscellaneous carloads, up 151 carloads, to 10,021. Commodity groups that posted decreases compared with the same week in 2019 included coal, down 32,853 carloads, to 48,128; motor vehicles and parts, down 13,562 carloads, to 2,235; and metallic ores and metals, down 7,572 carloads, to 17,496.
“With most of the country still firmly locked down, rail volumes are predictably down,” said AAR Senior Vice President John T. Gray. “Last week, coal accounted for more than 40 percent of the year-over-year decline in total carloads. Coal’s decline is due to long-term structural shifts in electricity markets made worse by the coronavirus. For most other commodities seeing big carload declines – including motor vehicles, steel, ethanol, petroleum products, and more – the coronavirus clearly bears substantial blame during the last few weeks. It’s reasonable to expect rail carload losses derived directly from the virus to begin their return after the crisis passes and as the economy gradually recovers.”
For the first 17 weeks of 2020, U.S. railroads reported cumulative volume of 3,784,396 carloads, down 10.7 percent from the same point last year; and 4,045,944 intermodal units, down 10.7 percent from last year. Total combined U.S. traffic for the first 17 weeks of 2020 was 7,830,340 carloads and intermodal units, a decrease of 10.7 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 | -28.2 % | -16.5 % | -22.4 % |
| — Ignoring coal, grain & petroleum | -20.3 % | ||
| Year Cumulative to Date | -10.7 % | -10.7 % | -10.7 % |
[click on the graph below to enlarge]
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