Rail Week Ending Saturday, May 4: Intuitive Sectors Slow

Week 18 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 marginally worsened.

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 4.3 % 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 declined from -4.5 % 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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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 now 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 -2.2 % improving
13 week rolling average -3.0 % slowing
52 week rolling average +0.9 % slowing

A summary for this week from the AAR:

For this week, total U.S. weekly rail traffic was 535,089 carloads and intermodal units, down 2.0 percent compared with the same week last year.

Total carloads for the week ending May 4 were 268,559 carloads, up 1.0 percent compared with the same week in 2018, while U.S. weekly intermodal volume was 266,530 containers and trailers, down 4.9 percent compared to 2018.

Four of the 10 carload commodity groups posted an increase compared with the same week in 2018. They included coal, up 6,712 carloads, to 84,481; petroleum and petroleum products, up 3,367 carloads, to 13,231; and miscellaneous carloads, up 1,295 carloads, to 9,543. Commodity groups that posted decreases compared with the same week in 2018 included nonmetallic minerals, down 4,072 carloads, to 37,103; grain, down 2,811 carloads, to 22,287; and motor vehicles and parts, down 2,060 carloads, to 16,491.

For the first 18 weeks of 2019, U.S. railroads reported cumulative volume of 4,505,712 carloads, down 2.3 percent from the same point last year; and 4,799,133 intermodal units, down 1.6 percent from last year. Total combined U.S. traffic for the first 18 weeks of 2019 was 9,304,845 carloads and intermodal units, a decrease of 1.9 percent compared to last year.

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