Week 27 of 2017 shows same week total rail traffic (from same week one year ago) improved according to the Association of American Railroads (AAR) traffic data. The economically intuitive sectors slowing continues.

Analyst Opinion of the Rail Data

We review this data set to understand the economy. If coal and grain are removed from the analysis, rail over the last 6 months been declining around 5% - but this week it grew 0.4 % (meaning that the predictive economic elements declined year-over-year). Also, consider total rail movements are below 2015 levels - even though they are above 2016 levels. This week the one year rolling averages continue in expansion for the fourth week after contraction beginning in late 2015.

Also, note that whenever a holiday is in a week - there are seasonality issues (this week had July 4th).

The following graph compares the four-week moving averages for the rail economically intuitive sectors (red line) vs. total movements (blue line): Rail's intuitive sectors have been bouncing around the zero growth line for most of 2017 but have recently moved above the zero growth line - but this week it fell below the zero growth line..

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 of the data from the AAR:

For this week, total U.S. weekly rail traffic was 453,080 carloads and intermodal units, up 2.4 percent compared with the same week last year.

Total carloads for the week ending July 8 were 229,501 carloads, up 1.1 percent compared with the same week in 2016, while U.S. weekly intermodal volume was 223,579 containers and trailers, up 3.7 percent compared to 2016.

Three of the 10 carload commodity groups posted an increase compared with the same week in 2016. They were nonmetallic minerals, up 17.3 percent to 34,115 carloads; coal, up 5.7 percent to 76,931 carloads; and chemicals, up 4.4 percent to 29,246 carloads. Commodity groups that posted decreases compared with the same week in 2016 included petroleum and petroleum products, down 19 percent to 8,449 carloads; miscellaneous carloads, down 15.3 percent to 7,853 carloads; and grain, down 13.3 percent to 18,062 carloads.

For the first 27 weeks of 2017, U.S. railroads reported cumulative volume of 6,928,954 carloads, up 6.2 percent from the same point last year; and 7,116,252 intermodal units, up 2.7 percent from last year. Total combined U.S. traffic for the first 27 weeks of 2017 was 14,045,206 carloads and intermodal units, an increase of 4.4 percent compared to last year.

Coal is over 1/3 of the total railcar count, and this week the EIA says coal production is 6 % lower than the production estimate in the comparable week in 2016.

The middle row in the table below removes coal and grain from the changes in the railcar counts as neither of these commodities is economically intuitive.

[click on graph below to enlarge]

For the week ended July 8, 2017

• Estimated U.S. coal production totaled approximately 13.4 million short tons (mmst)
• This production estimate is 15.3% lower than last week's estimate and 6% lower than the production estimate in the comparable week in 2016
• East of the Mississippi River coal production totaled 5 mmst
• West of the Mississippi River coal production totaled 8.4 mmst
• U.S. year-to-date coal production totaled 402.8 mmst, 15.8% higher than the comparable year-to-date coal production in 2016

Coal production from EIA.gov