Written by Steven Hansen
Week 18 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 carloads intuitive sector’s rolling average again worsened this week and now is historically low. Intermodal has a serious contraction 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 22.7 % year-over-year for this week [20.3 % 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 -18.1 % to -20.4 %.
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 | -22.4 % | worsening |
| 13 week rolling average | -13.5 % | worsening |
| 52 week rolling average | -8.2 % | worsening |
A summary for this week from the AAR:
U.S. railroads originated 980,535 carloads in April 2020, down 25.2 percent, or 329,693 carloads, from April 2019. U.S. railroads also originated 1,095,423 containers and trailers in April 2020, down 17.2 percent, or 227,165 units, from the same month last year. Combined U.S. carload and intermodal originations in April 2020 were 2,075,958, down 21.2 percent, or 556,858 carloads and intermodal units from April 2019.
In April 2020, two of the 20 carload commodity categories tracked by the AAR each month saw carload gains compared with April 2019. These were all other carloads, up 2,699 carloads or 9 percent; and farm products excl. grain, up 1,093 carloads or 29 percent. Commodities that saw declines in April 2020 from April 2019 were coal, down 154,455 carloads or 38 percent; motor vehicles & parts, down 72,437 carloads or 86.3 percent; and chemicals, down 19,786 carloads or 11.9 percent.
“To no one’s surprise, the pandemic made April a challenging month for rail traffic. The 25.2 percent year-over-year decline in total rail carloads was the worst decline for total carloads for any month since our records begin in 1989, and the 17.2 percent decline in intermodal loadings in April was the worst since the summer of 2009,” said AAR Senior Vice President John T. Gray. “Coal and autos were by far the worst-hit commodities in April, but declines spanned the industrial spectrum, hitting finished steel and steel scrap, chemicals, petroleum products, sand and stone, and much else. We don’t know exactly when it will happen, but our economy – and rail traffic – will rebound. No matter what, the men and women on our nation’s railroads will do their part to keep supply chains moving safely and efficiently as they link our businesses and communities to each other and to the world.”
Excluding coal, carloads were down 175,238 carloads, or 19.4 percent, in April 2020 from April 2019. Excluding coal and grain, carloads were down 167,802 carloads, or 21.3 percent.
Total U.S. carload traffic for the first four months of 2020 was 3,973,586 carloads, down 11.8 percent, or 532,448 carloads, from the same period last year; and 4,273,708 intermodal units, down 10.9 percent, or 525,462 containers and trailers, from last year.
Total combined U.S. traffic for the first 18 weeks of 2020 was 8,247,294 carloads and intermodal units, a decrease of 11.4 percent compared to last year.
Week Ending May 2, 2020
Total U.S. weekly rail traffic was 416,954 carloads and intermodal units, down 22.1 percent compared with the same week last year.
Total carloads for the week ending May 2 were 189,190 carloads, down 29.6 percent compared with the same week in 2019, while U.S. weekly intermodal volume was 227,764 containers and trailers, down 14.5 percent compared to 2019.
One of the 10 carload commodity groups posted an increase compared with the same week in 2019. It was grain, up 355 carloads, to 22,653. Commodity groups that posted decreases compared with the same week in 2019 included coal, down 38,851 carloads, to 45,806; motor vehicles and parts, down 14,506 carloads, to 1,985; and metallic ores and metals, down 7,091 carloads, to 16,535.
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 | -29.6 % | -14.5 % | -22.1 % |
| — Ignoring coal, grain & petroleum | -22.7 % | ||
| Year Cumulative to Date | -11.8 % | -10.9 % | -11.4 % |
[click on the graph below to enlarge]
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