Written by Steven Hansen
Week 20 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 Great Recession values. 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 22.8 % year-over-year for this week [20.7 % 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 -20.8 % to -21.5 %.
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 | -22.3 % | unchanged |
| 13 week rolling average | -15.8 % | worsening |
| 52 week rolling average | -8.9 % | worsening |
A summary for this week from the AAR:
For this week, total U.S. weekly rail traffic was 416,115 carloads and intermodal units, down 22 percent compared with the same week last year.
Total carloads for the week ending May 16 were 184,415 carloads, down 30.2 percent compared with the same week in 2019, while U.S. weekly intermodal volume was 231,700 containers and trailers, down 14 percent compared to 2019.
None of the 10 carload commodity groups posted an increase compared with the same week in 2019. Commodity groups that posted decreases compared with the same week in 2019 included coal, down 35,879 carloads, to 45,756; motor vehicles and parts, down 14,242 carloads, to 2,865; and metallic ores and metals, down 9,245 carloads, to 14,101.
“The 30.2% decline in total U.S. carloads last week was the biggest year-over-year weekly decline for total carloads since 1988, when our data begin. Coal didn’t help: last week was the fifth straight week in which coal carloads were down at least 40% from last year,” said AAR Senior Vice President John T. Gray. “For many other key rail commodities, including chemicals, petroleum products, and crushed stone and sand, carloads last week were roughly the same as in the previous few weeks, while intermodal originations last week were the most in eight weeks. As the Covid-19 situation continues to evolve across the globe, North America’s freight railroads will remain focused on safeguarding the health and safety of their workforce while working tirelessly to maintain the flow of goods necessary to preserve public health, sustain families, and help the economy recover as quickly as the situation allows.”
For the first 20 weeks of 2020, U.S. railroads reported cumulative volume of 4,343,145 carloads, down 13.6 percent from the same point last year; and 4,732,813 intermodal units, down 11.4 percent from last year. Total combined U.S. traffic for the first 20 weeks of 2020 was 9,075,958 carloads and intermodal units, a decrease of 12.5 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 | -28.4 % | -16.0 % | -22.1 % |
| — Ignoring coal, grain & petroleum | -20.7 % | ||
| Year Cumulative to Date | -12.7 % | -11.2 % | -11.9 % |
[click on the graph below to enlarge]
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