Week 52 of 2017 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 remain in expansion, but the decline in the last week of the year negatively affected all the averages.

Analyst Opinion of the Rail Data

We review this data set to understand the economy. If coal and grain are removed from the analysis, this week it declined 8.0 % (meaning that the predictive economic elements worsened year-over-year). The decline likely was due to a holiday mismatch between 2016 and 2017 - and that is why we primarily use rolling averages.

Intermodal transport declined year-over-year this week.

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.

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:

U.S. railroads originated 998,168 carloads in December 2017, up 2.5 percent, or 24,606 carloads, from December 2016. U.S. railroads also originated 1,065,965 containers and trailers in December 2017, up 5.3 percent, or 53,980 units, from the same month last year. Combined U.S. carload and intermodal originations in December 2017 were 2,064,133, up 4 percent, or 78,586 carloads and intermodal units from December 2016.

"Rail traffic finished 2017 on a positive note," said AAR Senior Vice President John T. Gray. "In December, total carloads were up for the first time in six months, and 14 of the 20 carload categories we track saw year-over-year gains - the most for any month in almost three years. Meanwhile, intermodal volume was up for the 11th straight month and set a new annual record, breaking the previous mark set in 2015."

In December 2017, 14 of the 20 carload commodity categories tracked by the AAR saw carload gains compared with December 2016. These included: crushed stone, sand & gravel, up 15,632 carloads or 23.1 percent; metallic ores, up 6,875 carloads or 35.2 percent; and chemicals, up 4,277 carloads or 3.5 percent. Commodities that saw declines in December 2017 from December 2016 included: grain, down 5,542 carloads or 6.1 percent; motor vehicles & parts, down 2,625 carloads or 4.1 percent; and nonmetallic minerals, down 1,424 carloads or 8.9 percent.

"Rail traffic is a useful gauge of the state of the economy, and it shows that the economy's momentum strengthened in the fourth quarter of 2017," Gray added. "Coal, grain, and petroleum products are not nearly as GDP-dependent as most other categories of rail traffic. If you exclude them, U.S. rail carloads were up 5.2% in the fourth quarter of 2017, their biggest quarterly percentage gain in more than three years. Railroads are well positioned to provide the safe, efficient and cost-effective service our economy will need if it is to continue to grow in the months and years ahead."

Excluding coal, carloads were up 23,290 carloads, or 3.6 percent, in December 2017 from December 2016. Excluding coal and grain, carloads were up 28,832 carloads, or 5.2 percent.

Total U.S. carload traffic for 2017 was 13,478,126 carloads, up 2.9 percent, or 381,266 carloads, from the same period in 2016; and 14,011,834 intermodal units, up 3.9 percent, or 521,121 containers and trailers, from 2016.

Total combined U.S. traffic for the full year of 2017 was 27,489,960 carloads and intermodal units, an increase of 3.4 percent compared to last year.

Week Ending December 30, 2017

Total U.S. weekly rail traffic was 397,032 carloads and intermodal units, down 6.8 percent compared with the same week in 2016.

Total carloads for the week ending December 30 were 194,680 carloads, down 9.8 percent compared with the same week in 2016, while U.S. weekly intermodal volume was 202,352 containers and trailers, down 3.7 percent compared to the same week in 2016.​

None of the 10 carload commodity groups posted an increase compared with the same week in 2016. Commodity groups that posted decreases compared with the same week in 2016 included coal, down 6,581 carloads, to 62,348; grain, down 3,839 carloads, to 15,713; and chemicals, down 2,448 carloads, to 27,944.

Coal is over 1/3 of the total railcar count, and this week the EIA says coal production is 28.1 % 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]

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For the week ended December 30, 2017

• Estimated U.S. coal production totaled approximately 10.5 million short tons (mmst)
• This production estimate is 32.4% lower than last week's estimate and 28.1% lower than the production estimate in the comparable week in 2016
• East of the Mississippi River coal production totaled 4 mmst
• West of the Mississippi River coal production totaled 6.4 mmst
• U.S. year-to-date coal production totaled 770.9 mmst, 6.1% higher than the comparable year-to-date coal production in 2016