Written by Steven Hansen
Week 27 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 improved this week but remains historically low. Intermodal has a serious contraction due to the logistic headwinds of the coronavirus but improved this week.
Analyst Opinion of the Rail Data
The improvement this week is likely due to a holiday mismatch between years – we will know for sure next week.
Intermodal and carloads are under Great Recession values. Container exports from China are now recovering, container exports from the U.S. declined and remains deep in contraction.
We review this data set to understand the economy. The intuitive sectors (total carloads removing coal, grain, and petroleum) contracted 9.7 % year-over-year for this week [16.9 % for 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 -16.8 % to -14.6 %.
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 | -11.4 % | improving |
| 13 week rolling average | -17.9 % | improving |
| 52 week rolling average | -9.9 % | improving |
A summary for this week from the AAR:
For this week, total U.S. weekly rail traffic was 437,989 carloads and intermodal units, down 2.4 percent compared with the same week last year.
Total carloads for the week ending July 4 were 192,767 carloads, down 12.7 percent compared with the same week in 2019, while U.S. weekly intermodal volume was 245,222 containers and trailers, up 7.7 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 1,233 carloads, to 15,148; and motor vehicles and parts, up 1,065 carloads, to 12,152. Commodity groups that posted decreases compared with the same week in 2019 included coal, down 10,946 carloads, to 48,930; metallic ores and metals, down 6,872 carloads, to 13,731; and nonmetallic minerals, down 5,000 carloads, to 26,632.
For the first 27 weeks of 2020, U.S. railroads reported cumulative volume of 5,700,780 carloads, down 15.8 percent from the same point last year; and 6,436,785 intermodal units, down 10 percent from last year. Total combined U.S. traffic for the first 27 weeks of 2020 was 12,137,565 carloads and intermodal units, a decrease of 12.8 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 | -12.7 % | +7.7 % | -2.4 % |
| — Ignoring coal, grain & petroleum | -8.7 % | ||
| Year Cumulative to Date | -15.8 % | -10.0 % | -12.8 % |
[click on the graph below to enlarge]
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