Week 6 of 2019 shows same week total rail traffic (from same week one year ago) insignificantly improved according to the Association of American Railroads (AAR) traffic data. The economically intuitive sectors rolling averages remain insignificantly positive.

Analyst Opinion of the Rail Data

This rail softness (and the suddenness and depth of its occurrence) is a little surprising. Could this be a precursor to the economic weakness seen in the economy in 2015 and 2016?

We review this data set to understand the economy. The intuitive sectors (total carloads removing coal, grain and petroleum) contracted 3.4 % 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 declined from +0.3 % to -2.0 %.

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 has been relatively strong over the 12 months - and was strong this week also.

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 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:

For this week, total U.S. weekly rail traffic was 519,779 carloads and intermodal units, up 0.1 percent compared with the same week last year.

Total carloads for the week ending February 9 were 242,266 carloads, down 3.3 percent compared with the same week in 2018, while U.S. weekly intermodal volume was 277,513 containers and trailers, up 3.4 percent compared to 2018.

Three of the 10 carload commodity groups posted an increase compared with the same week in 2018. They were petroleum and petroleum products, up 2,420 carloads, to 12,740; grain, up 1,685 carloads, to 20,720; and motor vehicles and parts, up 363 carloads, to 17,069. Commodity groups that posted decreases compared with the same week in 2018 included coal, down 9,107 carloads, to 75,864; farm products excl. grain, and food, down 1,242 carloads, to 15,063; and miscellaneous carloads, down 967 carloads, to 8,487.

For the first six weeks of 2019, U.S. railroads reported cumulative volume of 1,480,753 carloads, up 0.9 percent from the same point last year; and 1,593,681 intermodal units, up 1 percent from last year. Total combined U.S. traffic for the first six weeks of 2019 was 3,074,434 carloads and intermodal units, an increase of 0.9 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 graph below to enlarge]