Week 43 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. Unfortunately, the economically intuitive element's growth rate is well below economic growth.

Analyst Opinion of the Rail Data

Rail's good growth seems to be running out - and the overall rate of growth in 2018 has slowly decelerated.

We review this data set to understand the economy. If coal, grain, and petroleum are removed from the analysis for carloads, this week it contracted 2.2 %. We primarily use rolling averages the analyze the data due to weekly volatility - and the 4 week rolling average for the intuitive sectors was declined from 0.8 % to 0.0 %.

Intermodal transport (containers or trailers on rail cars) growth is also slowing year-over-year - but this week it grew 6.1 % YoY.

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

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:

For this week, total U.S. weekly rail traffic was 562,804 carloads and intermodal units, up 4.4 percent compared with the same week last year.

Total carloads for the week ending October 27 were 268,535 carloads, up 2.6 percent compared with the same week in 2017, while U.S. weekly intermodal volume was 294,269 containers and trailers, up 6.1 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 4,373 carloads, to 87,975; petroleum and petroleum products, up 3,548 carloads, to 13,188; and chemicals, up 1,681 carloads, to 31,689. Commodity groups that posted decreases compared with the same week in 2017 were nonmetallic minerals, down 4,097 carloads, to 35,193; and motor vehicles and parts, down 816 carloads, to 16,852.

For the first 43 weeks of 2018, U.S. railroads reported cumulative volume of 11,316,291 carloads, up 1.9 percent from the same point last year; and 11,986,177 intermodal units, up 5.7 percent from last year. Total combined U.S. traffic for the first 43 weeks of 2018 was 23,302,468 carloads and intermodal units, an increase of 3.8 percent compared to last year.

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 October 27, 2018

• Estimated U.S. coal production totaled approximately 14.9 million short tons (mmst)
• This production estimate is 2.6% higher than last week's estimate and 1.9% higher than the production estimate in the comparable week in 2017
• East of the Mississippi River coal production totaled 6 mmst
• West of the Mississippi River coal production totaled 8.9 mmst
• U.S. year-to-date coal production totaled 621.1 mmst, 2.8% lower than the comparable year-to-date coal production in 2017