June 2011 Rail Traffic Effected by Collapse of Coal Carloads

June 2011 data released by the American Association of Railroads (AAR) continues to show the softening economy.   Carloads were up 0.9% year-over-year, while intermodal (containers + trailers) were up 4.6% (unadjusted data).

Rail traffic remains well under its 2006 peak, and the growth is becoming “less good” against 2010.  Intermodal which is the transport of containers and trailers on rail cars which is the green shoot for rail is also showing deteriorating growth.

Much of the rail softness is attributable to coal shipments being down 3.2% year-over-year.  Coal accounts for 44% of all carloads.

Coal movement in the USA is well below levels seen in the last five years.  Coal remains in the forefront in the AAR summary statement:

In June 2011, 14 of the 20 carload commodity categories tracked by the AAR saw increases compared with June 2010. In May 2011, only 8 did.  Unfortunately, one of the six categories with a decline in June was coal. Coal accounted for 44% of non-intermodal U.S. rail carloads in the first half of the year, so when coal carloads are down, it’s hard for other commodities to make up the difference. Coal carloads in June 2011 were down 19,851 carloads (3.2%) from June 2010, the third straight monthly year-over-year decline for coal and its largest percentage decline since February 2010. In Q2 2011, coal carloads were down 2.7% (44,323 carloads) from Q2 2010.

There appears to be little future good news for coal transport.  On 07 July 2011, the EPA tightened emissions standards.

Thursday the EPA announced that they have finalized additional Clean Air Act provisions, collectively known as “The Cross-State Air Pollution Rule” to ostensibly “reduce air pollution and attain clean air standards,” by requiring coal companies in 27 states to slash emissions of sulfur dioxide and nitrogen dioxide by 73 percent and 54 percent, respectively, from 2005 levels by 2014.

Rail carload counts are down because users of coal are turning to alternative energy sources.  If Econintersect ignores coal, carloads are up 12% year-over-year – and that is the metric to judge economic growth year-over-year.

Related Articles:

Container Traffic Continues Growth in May 2011 by Steven Hansen

May 2011 Diesel Use Suggests Economy Was Slowing (or Not) by Steven Hansen

Trucking Tonnage Down 2.3% in May 2011 by GEI News