Week 31 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 recovering from a coronavirus pandemic.

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. 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 13.3 % year-over-year for this week [12.7 % 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 declined from -11.9 % to -13.0 %.

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):

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).

A summary for this week from the AAR:

U.S. railroads originated 1,042,017 carloads in July 2020, down 17.6 percent, or 222,337 carloads, from July 2019. U.S. railroads also originated 1,295,960 containers and trailers in July 2020, down 1.4 percent, or 18,403 units, from the same month last year. Combined U.S. carload and intermodal originations in July 2020 were 2,337,977, down 9.3 percent, or 240,740 carloads and intermodal units from July 2019.

In July 2020, three of the 20 carload commodity categories tracked by the AAR each month saw carload gains compared with July 2019. These were food products, up 475 carloads or 1.7 percent; farm products excl. grain, up 295 carloads or 8.3 percent; and lumber & wood products, up 258 carloads or 1.6 percent. Commodities that saw declines in July 2020 from July 2019 included: coal, down 110,225 carloads or 28.7 percent; crushed stone, sand & gravel, down 29,547 carloads or 24.8 percent; and metallic ores, down 21,942 carloads or 63.7 percent.

"The old saying, 'You have to play the hand you're dealt' applies to railroads," said AAR Senior Vice President John T. Gray. "Rail traffic, like the overall economy, is generally trending in the right direction, but progress is slow; there's a long way to go before it's back to normal; and both week-to-week improvements and setbacks in individual commodities are to be expected. Coal and other energy-related rail commodities continue to struggle more than most, while intermodal is closer than any other rail traffic category to pre-pandemic levels."

Excluding coal, carloads were down 112,112 carloads, or 12.7 percent, in July 2020 from July 2019. Excluding coal and grain, carloads were down 100,575 carloads, or 13.2 percent.

Total U.S. carload traffic for the first seven months of 2020 was 6,550,030 carloads, down 16.2 percent, or 1,266,725 carloads, from the same period last year; and 7,487,523 intermodal units, down 9.1 percent, or 751,100 containers and trailers, from last year.

Total combined U.S. traffic for the first 31 weeks of 2020 was 14,037,553 carloads and intermodal units, a decrease of 12.6 percent compared to last year.

Week Ending August 1, 2020

Total U.S. weekly rail traffic was 487,968 carloads and intermodal units, down 9.9 percent compared with the same week last year.

Total carloads for the week ending August 1 were 217,691 carloads, down 18.3 percent compared with the same week in 2019, while U.S. weekly intermodal volume was 270,277 containers and trailers, down 1.8 percent compared to 2019.

None of the 10 carload commodity groups posted an increase compared with the same week in 2019. Commodity groups that posted decreases compared with the same week in 2019 included coal, down 24,077 carloads, to 59,458; nonmetallic minerals, down 9,516 carloads, to 29,578; and metallic ores and metals, down 6,972 carloads, to 16,516.

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 the graph below to enlarge]