Week 4 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 8.9 % 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 worsened from -3.9 % to -5.0 %

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):

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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:

U.S. railroads originated 930,303 carloads in January 2021, down 2.1 percent, or 19,799 carloads, from January 2020. U.S. railroads also originated 1,173,220 containers and trailers in January 2021, up 12.1 percent, or 126,548 units, from the same month last year. Combined U.S. carload and intermodal originations in January 2021 were 2,103,523, up 5.3 percent, or 106,749 carloads and intermodal units from January 2020.

In January 2021, 10 of the 20 carload commodity categories tracked by the AAR each month saw carload gains compared with January 2020. These included: grain, up 31,434 carloads or 40.0 percent; chemicals, up 5,717 carloads or 4.4 percent; and metallic ores, up 5,190 carloads or 28.7 percent. Commodities that saw declines in January 2021 from January 2020 included: coal, down 35,356 carloads or 12.7 percent; crushed stone, sand & gravel, down 14,097 carloads or 18.9 percent; and petroleum & petroleum products, down 6,529 carloads or 12.1 percent.

"We are encouraged by rail volumes in January. U.S. intermodal shipments and carloads of chemicals set new records; grain had its biggest-ever year-over-year increase; total carloads were the highest they've been in a year; and carloads excluding coal actually grew year-over-year for the second straight month," said AAR Senior Vice President John T. Gray. "To be sure, the economy remains under strain with a good deal of uncertainty, but we're cautiously optimistic about the future. Railroads are well prepared to support a strong recovery whenever it occurs."

Excluding coal, carloads were up 15,557 carloads, or 2.3 percent, in January 2021 from January 2020. Excluding coal and grain, carloads were down 15,877 carloads, or 2.7 percent.

Week Ending January 30, 2021

Total U.S. weekly rail traffic was 520,693 carloads and intermodal units, up 2.1 percent compared with the same week last year.

Total carloads for the week ending January 30 were 231,370 carloads, down 4.1 percent compared with the same week in 2020, while U.S. weekly intermodal volume was 289,323 containers and trailers, up 7.6 percent compared to 2020.

Three of the 10 carload commodity groups posted an increase compared with the same week in 2020. They were grain, up 8,321 carloads, to 27,482; chemicals, up 980 carloads, to 34,023; and farm products excl. grain, and food, up 98 carloads, to 16,373. Commodity groups that posted decreases compared with the same week in 2020 included coal, down 7,710 carloads, to 61,405; nonmetallic minerals, down 5,424 carloads, to 24,620; and petroleum and petroleum products, down 1,952 carloads, to 11,291.

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]