Week 52 of 2018 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 rolling averages improved and returned to positive territory this week.

Analyst Opinion of the Rail Data

The overall rate of rail growth in 2018 has slowly decelerating - although this final week in 2018 saw increased growth. As a summary for 2018 - the rate of growth slowed relative to the first half of the year.

We review this data set to understand the economy. If coal, grain and petroleum are removed from the analysis for carloads, this week it expanded 2.6 % year-over-year. We primarily use rolling averages the analyze the data due to weekly volatility - and the 4 week rolling average for the intuitive sectors remain in contraction year-over-year but improved from -0.8% to +0.2 %.

The following graph compares the four-week moving averages for carload economically intuitive sectors (red line) vs. total movements (blue line):

Intermodal transport (containers or trailers on rail cars) growth has been relatively strong and grew 1.8 % YoY this week - and the rate of growth trend has been slowing.

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 for this week from the AAR:

U.S. railroads originated 1,021,978 carloads in December 2018, up 2.9 percent, or 29,139 carloads, from December 2017. U.S. railroads also originated 1,096,116 containers and trailers in December 2018, up 5 percent, or 52,115 units, from the same month last year. Combined U.S. carload and intermodal originations in December 2018 were 2,118,094, up 4 percent, or 81,254 carloads and intermodal units from December 2017.

In December 2018, 12 of the 20 carload commodity categories tracked by the AAR each month saw carload gains compared with December 2017. These included: coal, up 12,382 carloads or 3.8 percent; petroleum & petroleum products, up 10,875 carloads or 26.5 percent; and chemicals, up 3,349 carloads or 2.7 percent. Commodities that saw declines in December 2018 from December 2017 included: crushed stone, sand & gravel, down 3,116 carloads or 4 percent; metallic ores, down 1,402 carloads or 5.3 percent; and stone, clay & glass products, down 938 carloads or 3.4 percent.

"U.S. freight rail traffic in 2018 was positive for the most part," said AAR Senior Vice President of Policy and Economics John T. Gray. "Intermodal set a new annual record for the fifth time in the past six years, while carloads of chemicals and crushed stone, sand, and gravel set new annual records. Petroleum products also had a mild resurgence. For the year, 13 of the 20 commodity categories we track saw increased carloads. On the negative side, coal continued to suffer in 2018 from market forces that favor natural gas and renewables for electricity generation. What happens in 2019 will depend on how the domestic and global economies hold up and the policies - particularly monetary and trade - that come out of our legislative and executive branches."

Excluding coal, carloads were up 16,757 carloads, or 2.5 percent, in December 2018 from December 2017. Excluding coal and grain, carloads were up 14,221 carloads, or 2.5 percent.

Total U.S. carload traffic for the first 12 months of 2018 was 13,640,641 carloads, up 1.8 percent, or 238,857 carloads, from the same period last year; and 14,472,849 intermodal units, up 5.5 percent, or 751,217 containers and trailers, from last year.

Total combined U.S. traffic for the first 52 weeks of 2018 was 28,113,490 carloads and intermodal units, an increase of 3.7 percent compared to last year.

Week Ending December 29, 2018

Total U.S. weekly rail traffic was 411,676 carloads and intermodal units, up 5.1 percent compared with the same week last year.

Total carloads for the week ending December 29 were 210,333 carloads, up 8.5 percent compared with the same week in 2017, while U.S. weekly intermodal volume was 201,343 containers and trailers, up 1.8 percent compared to 2017.

Eight of the 10 carload commodity groups posted an increase compared with the same week in 2017. They included coal, up 6,195 carloads, to 68,511; petroleum and petroleum products, up 3,495 carloads, to 11,639; and grain, up 2,771 carloads, to 18,486. Commodity groups that posted decreases compared with the same week in 2017 were miscellaneous carloads, down 386 carloads, to 6,572; and forest products, down 289 carloads, to 9,117.

The middle row in the table below removes coal, grain and petroleum from the changes in the railcar counts as these commodities are not economically intuitive.

[click on graph below to enlarge]