Week 30 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, this week it contracted 1.9 % (meaning that the predictive economic elements contracted 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 ninth week after contraction beginning in late 2015.

The strength this week again was intermodal - which is economically positive (and is contrary to the slowness of the economically intuitive carload counts).

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 remained below the zero growth line for the fourth 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 [including coal and grain] and intermodal combined).

A summary of the data from the AAR:

U.S. railroads originated 1,019,239 carloads in July 2017, down 0.6 percent, or 6,079 carloads, from July 2016. U.S. railroads also originated 1,058,354 containers and trailers in July 2017, up 5.6 percent, or 55,997 units, from the same month last year. Combined U.S. carload and intermodal originations in July 2017 were 2,077,593, up 2.5 percent, or 49,918 carloads and intermodal units from July 2016.

In July 2017, nine of the 20 carload commodity categories tracked by the AAR each month saw carload gains compared with July 2016. These included: crushed stone, sand & gravel, up 15 percent or 13,458 carloads; coal, up 4 percent or 13,097 carloads; and chemicals, up 1.5 percent or 1,842 carloads. Commodities that saw declines in July 2017 from July 2016 included: grain, down 14 percent or 13,325 carloads; motor vehicles & parts, down 12.9 percent or 7,544 carloads; and petroleum & petroleum products, down 15.4 percent or 6,508 carloads.

"The decline in total rail carloads in July 2017 from July 2016 was very small at 0.6 percent, but it was the first carload decline since October 2016," said AAR Senior Vice President John T. Gray. "Beginning in July last year, certain categories of rail traffic — coal and grain in particular — saw a surge in rail volumes. That surge suddenly made comparisons to this year much tougher. That largely explains July's carload decline. Meanwhile, intermodal continues to do well — July's 5.6% gain is the sixth straight year-over-year monthly increase, and intermodal is on track to set a new annual record this year."

Excluding coal, carloads were down 2.8 percent, or 19,176 carloads, in July 2017 from July 2016. Excluding coal and grain, carloads were down 1 percent, or 5,851 carloads.

Total U.S. carload traffic for the first seven months of 2017 was 7,718,692 carloads, up 5.4 percent, or 397,999 carloads, from the same period last year; and 7,951,027 intermodal units, up 3.1 percent, or 235,512 containers and trailers, from last year.

Total combined U.S. traffic for the first 30 weeks of 2017 was 15,669,719 carloads and intermodal units, an increase of 4.2 percent compared to last year.

Week Ending July 29, 2017

Total U.S. weekly rail traffic was 550,356 carloads and intermodal units, up 2.5 percent compared with the same week last year.

Total carloads for the week ending July 29 were 270,006 carloads, down 1.5 percent compared with the same week in 2016, while U.S. weekly intermodal volume was 280,350 containers and trailers, up 6.8 percent compared to 2016.

Three of the 10 carload commodity groups that AAR follows weekly posted an increase compared with the same week in 2016. They were nonmetallic minerals, up 6.5 percent to 40,192 carloads; coal, up 2.4 percent to 92,430 carloads; and chemicals, up 1.7 percent to 31,556 carloads. Commodity groups that posted decreases compared with the same week in 2016 included grain, down 16 percent to 20,725 carloads; petroleum and petroleum products, down 14.2 percent to 8,910 carloads; and motor vehicles and parts, down 13.9 percent to 15,008 carloads.

Coal is over 1/3 of the total railcar count, and this week the EIA says coal production is 13.1 % 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]

z rail1.png

For the week ended July 29, 2017

• Estimated U.S. coal production totaled approximately 16.1 million short tons (mmst)
• This production estimate is 4.4% higher than last week's estimate and 13.1% higher than the production estimate in the comparable week in 2016
• East of the Mississippi River coal production totaled 6 mmst
• West of the Mississippi River coal production totaled 10.1 mmst
• U.S. year-to-date coal production totaled 449.7 mmst, 14.9% higher than the comparable year-to-date coal production in 2016

Coal production from EIA.gov