Written by Steven Hansen
Week 22 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 marginally improved this week but remains 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. Container exports from China are now recovering, container exports from the U.S. is marginally improving but remain deep in contraction.
The AAR thinks they see some signs of improvement – but I need to see a clear sign above the normal volatility of rail.
We review this data set to understand the economy. The intuitive sectors (total carloads removing coal, grain, and petroleum) contracted 19.5 % year-over-year for this week [21.2 % 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 marginally improved from -21.7 % to -20.9 %.
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 | -20.3 % | improving |
| 13 week rolling average | -17.3 % | worsening |
| 52 week rolling average | -9.4 % | worsening |
A summary for this week from the AAR:
The Association of American Railroads (AAR) today reported U.S. rail traffic for the week ending May 30, 2020, as well as volumes for May 2020.
U.S. railroads originated 740,171 carloads in May 2020, down 27.7 percent, or 282,965 carloads, from May 2019. U.S. railroads also originated 912,922 containers and trailers in May 2020, down 13 percent, or 136,241 units, from the same month last year. Combined U.S. carload and intermodal originations in May 2020 were 1,653,093, down 20.2 percent, or 419,206 carloads and intermodal units from May 2019.
In May 2020, one of the 20 carload commodity categories tracked by the AAR each month saw carload gains compared with May 2019. It was farm products excl. grain, up 324 carloads or 10.6 percent. Commodities that saw declines in May 2020 from May 2019 were coal, down 127,201 carloads or 40.7 percent; motor vehicles & parts, down 49,341 carloads or 75 percent; and crushed stone, sand & gravel, down 18,196 carloads or 19.4 percent.
“Overall traffic levels last week were down from the prior week as would be expected for a week which includes a national holiday” said AAR Senior Vice President John T. Gray. “However, it is somewhat heartening to note that 11 of the 20 carload categories, including several major commodity areas, improved their showing versus 2019 when comparing their current loading rates to those we have seen the last four weeks. Perhaps most notably, automobile loadings improved to about one-third the normal level as assembly plants began the intricate process of reopening. While this is still a long way from where we would like to be, it is far better than the ten percent of norm of only two weeks ago.”
Excluding coal, carloads were down 155,764 carloads, or 21.9 percent, in May 2020 from May 2019. Excluding coal and grain, carloads were down 150,701 carloads, or 24.3 percent.
Total U.S. carload traffic for the first five months of 2020 was 4,713,757 carloads, down 14.7 percent, or 815,413 carloads, from the same period last year; and 5,186,630 intermodal units, down 11.3 percent, or 661,703 containers and trailers, from last year.
Total combined U.S. traffic for the first 22 weeks of 2020 was 9,900,387 carloads and intermodal units, a decrease of 13 percent compared to last year.
Week Ending May 30, 2020
Total U.S. weekly rail traffic was 395,714 carloads and intermodal units, down 17.3 percent compared with the same week last year
Total carloads for the week ending May 30 were 179,973 carloads, down 24.2 percent compared with the same week in 2019, while U.S. weekly intermodal volume was 215,741 containers and trailers, down 10.6 percent compared to 2019.
Two of the 10 carload commodity groups posted an increase compared with the same week in 2019. They were miscellaneous carloads, up 555 carloads, to 8,794; and grain, up 410 carloads, to 21,246. Commodity groups that posted decreases compared with the same week in 2019 included coal, down 24,551 carloads, to 46,144; metallic ores and metals, down 8,470 carloads, to 12,637; and motor vehicles and parts, down 8,052 carloads, to 6,629.
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 | -24.2 % | -10.6 % | -17.3 % |
| — Ignoring coal, grain & petroleum | -19.5 % | ||
| Year Cumulative to Date | -14.7 % | -11.3 % | -13.0 % |
[click on the graph below to enlarge]
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