Week 8 of 2017 shows same week total rail traffic (from same week one year ago) insignificantly improved according to the Association of American Railroads (AAR) traffic data.

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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 shows -1.9 % (meaning that the predicitive economic elements declined from year-over-year). This week was relatively soft, and at this point - I would consider this an anomaly (or the usual holiday week mismatch.

The rolling averages were mixed this week.

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 and intermodal combined).

A summary of the data from the AAR:

The Association of American Railroads (AAR) today reported weekly U.S. rail traffic, as well as volumes for February 2017.

Carload traffic in February totaled 1,044,040 carloads, up 6.7 percent or 65,141 carloads from February 2016. U.S. railroads also originated 1,068,439 containers and trailers in February 2017, up 1.8 percent or 19,350 units from the same month last year. For February 2017, combined U.S. carload and intermodal originations were 2,112,479, up 4.2 percent or 84,491 carloads and intermodal units from February 2016.

In February 2017, 11 of the 20 carload commodity categories tracked by the AAR each month saw carload gains compared with February 2016. These included: coal, up 19.2 percent or 57,589 carloads; crushed stone, gravel, and sand, up 13.1 percent or 10,091 carloads; and primary metal products, up 6.8 percent or 2,357 carloads. Commodities that saw declines in February 2017 from February 2016 included: petroleum and petroleum products, down 12.4 percent or 5,543 carloads; motor vehicles and parts, down 4.8 percent or 3,746; carloads and metallic ores, down 19.1 percent or 2,793 carloads.

Excluding coal, carloads were up 1.1 percent or 7,552 carloads in February 2017 from February 2016.

Total U.S. carload traffic for the first 8 weeks of 2017 was 2,040,613 carloads, up 4.8 percent from the same point last year; and 2,089,507 intermodal units, up 0.04 percent from last year. Total combined U.S. traffic for the first 8 weeks of 2017 was 4,130,120 carloads and intermodal units, an increase of 2.3 percent compared to last year.

"The 19.2 percent increase in coal carloads in February 2017 was the highest percentage gain for coal since sometime before 1988 when our current record series began," said AAR Senior Vice President of Policy and Economics John T. Gray. "While it's an impressive gain, February 2017 was, unfortunately, also the second worst February in absolute terms for coal since sometime before 1988. It's all too representative of the challenges railroads are facing as their markets change. However, these same market changes are offering new opportunities. Over the past 15 years, the industry has worked hard to create a solid foundation to exploit these opportunities."

Week Ending February 25, 2017

Total U.S. weekly rail traffic for the week ending February 25, 2017 was 521,451 carloads and intermodal units, up 0.1 percent compared with the same week last year.

Total carloads for the week ending February 25 were 256,756 carloads, up 3.5 percent compared with the same week in 2016, while U.S. weekly intermodal volume was 264,695 containers and trailers, down 3 percent compared to 2016.

Three of the 10 carload commodity groups posted an increase compared with the same week in 2016. They were coal, up 14 percent to 84,822 carloads; nonmetallic minerals, up 12.1 percent to 33,908 carloads; and metallic ores and metals, up 0.2 percent to 21,272 carloads. Commodity groups that posted decreases compared with the same week in 2016 included petroleum and petroleum products, down 15.5 percent to 9,438 carloads; motor vehicles and parts, down 5.8 percent to 18,634 carloads; and miscellaneous carloads, down 4.3 percent to 8,921 carloads.

Coal is over 1/3 of the total railcar count, and this week the EIA says coal production is 10.8 % higher 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]

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For the week ended February 25, 2017

• Estimated U.S. coal production totaled approximately 15.7 million short tons (mmst)
• This production estimate is 6.7% lower than last week's estimate and 10.8% higher than the production estimate in the comparable week in 2016
• East of the Mississippi River coal production totaled 6.3 mmst
• West of the Mississippi River coal production totaled 9.4 mmst
• U.S. year-to-date coal production totaled 128.3 mmst, 16.3% higher than the comparable year-to-date coal production in 2016

Coal production from EIA.gov