Rail Week Ending Saturday, November 23: Was Great But...
Week 47 of 2019 shows same week total rail traffic (from same week one year ago) improved according to the Association of American Railroads (AAR) traffic data. The problem with the data for this week was a holiday mismatch - wait until next week when the opposite effects of the mismatch will occur.
Analyst Opinion of the Rail Data
We review this data set to understand the economy. The intuitive sectors (total carloads removing coal, grain, and petroleum) improved 18.5 % year-over-year for this 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 -5.4 % to +0.4 %.
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 relatively strong until the beginning of 2019 - and now the year-to-date growth is deep in contraction.
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).
(Click on image to enlarge)
A summary for this week from the AAR:
For this week, total U.S. weekly rail traffic was 521,927 carloads and intermodal units, up 10.6 percent compared with the same week last year.
Total carloads for the week ending November 23 were 251,901 carloads, up 7.6 percent compared with the same week in 2018, while U.S. weekly intermodal volume was 270,026 containers and trailers, up 13.5 percent compared to 2018.
Nine of the 10 carload commodity groups posted an increase compared with the same week in 2018. They included nonmetallic minerals, up 7,573 carloads, to 33,069; chemicals, up 3,972 carloads, to 31,834; and motor vehicles and parts, up 3,625 carloads, to 17,757. One commodity group posted a decrease compared with the same week in 2018: coal, down 6,205 carloads, to 75,859.
For the first 47 weeks of 2019, U.S. railroads reported cumulative volume of 11,829,176 carloads, down 4.2 percent from the same point last year; and 12,519,862 intermodal units, down 4.3 percent from last year. Total combined U.S. traffic for the first 47 weeks of 2019 was 24,349,038 carloads and intermodal units, a decrease of 4.2 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.
(Click on image to enlarge)
(Click on image to enlarge)
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