Rail Week Ending Saturday, July 6: Economic Intuitive Sectors Remain Deep In Contraction

Week 27 of 2019 shows same week total rail traffic (from same week one year ago) contracted according to the Association of American Railroads (AAR) traffic data. The economically intuitive sectors rolling averages remain in contraction - and remain little changed.

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) contracted 7.6 % 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 marginally improved from -5.0 to -4.9.

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 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 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).

  Percent current rolling average change from the rolling average of one year ago Trend Direction
4 week rolling average -6.0% improving
13 week rolling average -4.6 % slowing
52 week rolling average -0.6 % slowing

A summary for this week from the AAR:

For this week, total U.S. weekly rail traffic was 448,459 carloads and intermodal units, down 7.5 percent compared with the same week last year.

Total carloads for the week ending July 6 were 220,759 carloads, down 8.2 percent compared with the same week in 2018, while U.S. weekly intermodal volume was 227,700 containers and trailers, down 6.9 percent compared to 2018.

Three of the 10 carload commodity groups posted an increase compared with the same week in 2018. They were grain, up 2,358 carloads, to 23,651; petroleum and petroleum products, up 2,083 carloads, to 12,347; and miscellaneous carloads, up 517 carloads, to 8,520. Commodity groups that posted decreases compared with the same week in 2018 included coal, down 16,575 carloads, to 59,905; nonmetallic minerals, down 3,593 carloads, to 31,655; and metallic ores and metals, down 1,510 carloads, to 20,578.

For the first 27 weeks of 2019, U.S. railroads reported cumulative volume of 6,772,977 carloads, down 3.1 percent from the same point last year; and 7,151,961 intermodal units, down 3.3 percent from last year. Total combined U.S. traffic for the first 27 weeks of 2019 was 13,924,938 carloads and intermodal units, a decrease of 3.2 percent compared to last year.

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