Econintersect: Week 7 of 2015 shows same week total rail traffic (from same week one year ago) declined significantly according to the Association of American Railroads (AAR) traffic data. Intermodal traffic, which accounts for half of movements, continued to contract year-over-year. Although it is assumed part of the intermodal decline was caused by labor issues at the West Coast Ports, and another part was caused by a large decline in coal production - it does not explain a good portion of the decline.

The AAR contibuted to this drop by defining week 1 of 2015 as week 53 of 2014 which put comparable weeks one off the correct week. Still it is hard to tell if the labor issues at the West Coast Ports, coal production decline, and the comparable week being off one week explains all the decline.

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 which generally are in a general growth cycle.

A summary of the data from the AAR:

The Association of American Railroads (AAR) today reported U.S. rail traffic for the week ending Feb. 21, 2015.

For this week, total U.S. weekly rail traffic was 473,161 carloads and intermodal units, down 11.5 percent compared with the same week last year.

Total carloads for the week ending Feb. 21, 2015 were 259,544 carloads, down 7.8 percent compared with the same week in 2014, while U.S. weekly intermodal volume was 213,617 containers and trailers, down 15.7 percent compared to 2014.

Grain was the lone commodity group to post an increase compared with the same week in 2014, up 4 percent to 22,877 carloads. Commodity groups that saw decreases during this one week included: motor vehicles and parts, down 12.2 percent to 14,980 carloads, coal, down 12 percent to 96,096 carloads and metallic ores and metals, down 9.2 percent to 20,235 carloads.

For the first seven weeks of 2015, U.S. railroads reported cumulative volume of 1,982,993 carloads, up 3.7 percent from the same point last year, and 1,692,864 intermodal units, down 2.3 percent from last year. Total combined U.S. traffic for the first seven weeks of 2015 was 3,675,857 carloads and intermodal units, up 0.8 percent from last year.

Coal is over 1/3 of the total railcar count, and this week is 13.3% lower than the production estimate in the comparable week in 2014. 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]

Current Rail Chart:

z rail1.png

From EIA.gov:

For the week ended February 21, 2015:

• Estimated U.S. coal production totaled approximately 16.5 million short tons (mmst)
• This production estimate is 14.0% lower than last week's estimate and 13.3% lower than the production estimate in the comparable week in 2014
• East of the Mississippi River coal production totaled 6.9 mmst
• West of the Mississippi River coal production totaled 9.6 mmst
• U.S. year-to-date coal production totaled 139.6 mmst, 0.8% higher than the comparable year-to-date coal production in 2014