Continuing the trend established in last month, the rail traffic upward trend continues in November 2011 with rail traffic growing 3.0% year-over-year (total – rail carloads plus intermodal).
This is a positive economic indicator for the coming months. Part of the reason for this new trend is that coal transport (which represents 38% of rail movements, grew at 1.3% year-over-year and is no longer a headwind.
The graphic below shows the total traffic on the USA rail. Comparing the above and below graphs, notice how coal was effecting rail usage.
Why have coal movements increased? According to the American Association of Railroads (AAR):
Year-over-year U.S. rail carloads of coal rose for the third straight month in November 2011, averaging 134,279 for the month — up 1.3% over November 2010. The chart on the bottom left shows that U.S. coal exports — most of which move by rail — are on pace to reach 106.1 million tons in 2011, which would be their highest since 1991. Coal imports are on pace to fall to 13.9 million tons in 2011, which would be their lowest since 2000. The chart at the bottom right shows that coal-based electricity generation continues to be in an intense competitive battle with electricity produced from other fuels.
In the prior months, I had to explain why rail contraction was not occurring in areas that had direct economic consequences – as contraction of coal movements was not due to a decline in power generation or other industrial uses.
Most finished consumer goods which travel on rail move in intermodal units, containers and trailers, on rail cars. If there was only one pulse point to watch – it is this one. It shows positive year-over-year growth. A caveat here: some of the growth is due from taking traffic from trucks, so one would need to view intermodal rail with truck to get a complete picture.
Here is how October 2011 transport indicators compare:
- Diesel Usage: Up 1.32% year-over-year
- Truck Transport: Up 0.5% year-over-year
- Container Counts: Year-over-year imports were down 6.6%, while exports were up 3.3%
- Rail Counts: Up 1.7% year-over-year
All important rail trend lines show economic activity has grown in November. This data is indicating economic expansion.