Week 2 of 2021 shows same week total rail traffic (from the same week one year ago) improved 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 slowly recovering from the coronavirus pandemic.

Analyst Opinion of the Rail Data

Total rail traffic has two components - carloads and intermodal (containers or trailers on rail cars). Container exports from China have recovered, container exports from the U.S. remain deep in contraction. This week again intermodal continued in expansion year-over-year and continues on a strengthening trendline.

Carloads 4-week rolling average is in expansion when compared to the 4 week rolling average one year ago but the economic intuitive sectors remain in contraction.

But overall because of the strength of intermodal, rail is growing year-over-year.

We review this data set to understand the economy. The intuitive sectors (total carloads removing coal, grain, and petroleum) contracted 4.1 % 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 -5.1 % to -4.7 %

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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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] ).

A summary for this week from the AAR:

For this week, total U.S. weekly rail traffic was 528,547 carloads and intermodal units, up 5.8 percent compared with the same week last year.

Total carloads for the week ending January 16 were 232,550 carloads, down 2 percent compared with the same week in 2020, while U.S. weekly intermodal volume was 295,997 containers and trailers, up 12.8 percent compared to 2020.

Five of the 10 carload commodity groups posted an increase compared with the same week in 2020. They included grain, up 8,246 carloads, to 27,613; metallic ores and metals, up 1,715 carloads, to 23,325; and farm products excluding grain, and food, up 1,621 carloads, to 16,818. Commodity groups that posted decreases compared with the same week in 2020 included coal, down 12,609 carloads, to 57,665; nonmetallic minerals, down 4,411 carloads, to 25,582; and miscellaneous carloads, down 402 carloads, to 9,755.

For the first two weeks of 2021, U.S. railroads reported cumulative volume of 467,954 carloads, down 1.8 percent from the same point last year; and 585,846 intermodal units, up 11.6 percent from last year. Total combined U.S. traffic for the first two weeks of 2021 was 1,053,800 carloads and intermodal units, an increase of 5.2 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 the graph below to enlarge]