INTERMODAL RAIL VOLUME FALLS 24%
Last week’s 12% decline looks like an aberration. Rail volumes were back in cliff diving mode this week as intermodal rail volume reported a year over year decline of 24%. The rail data remains severely depressed and is showing no signs of recovery. It is practically impossible to see a sharp economic recovery without improvement in this kind of data. Yesterday’s data from JB Hunt confirms the weakness.
I would continue to play the bullish side of this earnings trade in the coming weeks, but do not get fooled into thinking that the “better than expected” earnings represent a recovering economy. It is more a sign of the ignorance of the analyst community than anything else.
The AAR reports:
WASHINGTON, July 16, 2009 — The Association of American Railroads today reported that rail traffic remains down year over year for the week ended July 11, 2009. U.S railroads reported originating 262,210 cars, down 17.9 percent compared with the same week in 2008. Regionally, carloadings were down 12.8 percent in the West and 25.6 percent in the East. Rail carloadings were at their highest level in 14 weeks.
Intermodal volume of 176,887 trailers or containers was down 23.7 percent from the same week last year. Container volume fell 19.4 percent and trailer volume dropped 40.3 percent. Total volume on U.S. railroads for the week ending July 11 was estimated at 28 billion ton-miles, off 16.9 percent from the same week last year.
All 19 carload freight commodity groups were down from last year, with declines ranging from 4.2 percent for the catch-all category labeled “all other carloads” to 58.4 percent for metals and metal products.
For the first 27 weeks of 2009, U.S. railroads reported cumulative volume of 7,069,102 carloads, down 19.2 percent from 2008; 4,993,245 trailers or containers, down 17.1 percent, and total volume of an estimated 751.7 billion ton-miles, down 18.2 percent.
Decreased rail traffic is probably related to decreased consumer spending. When consumers aren’t buying. Then there isn’t as much need as before to transport things and commodities by railway. And with consumer spending making up 70% of the US economy, this doesn’t bode well for the expected economic recovery in the second half of this year.
Hoping that the already heavily indebted consumers will go on another borrowing and shopping spree simply doesn’t make sense. Consumer debt is already close to all time record high. Consumers simply can’t borrow and spend anymore without making their debts completely unmanageable and defaulting on them.
If there is going to be growth in the US economy. Then it will have to come from something other than consumer borrowing and spending. Such as producing more stuff and exporting it to other countries. But such growth is unlikely to happen at the present time. Because there are no international buyers who are willing and able buy a lot more exports from USA.
Perhaps some companies can stay profitable for a while by taking advantage of government stimulus programs in Asia, USA, and elsewhere. Or by speculating in financial markets. Or cutting their costs and firing their employees. But such profitability is unstable and likely won’t last. There is a limit to how much money governments can borrow and spend. And firing employees to increase profits hurts the very consumers that the economy depends on.
I infer this was released during market hours? Do you know off-hand what time? (Not that there was so much as a downward blip in the market after ~10am…)
No one reports on this vfsv. It is probably one of the most important economic releases that we get every week. In my opinion, just as important as the initial jobless claims, but no one reports this. Railfax releases the data each thursday morning and the AAR releases a detailed report each Thursday at varying times.
I have no idea why the MSM doesn’t report these figures. I had to compile the data myself to create annual, monthly and weekly charts because no one else does it….Confounding really….
Well thank you for sharing the data! Yet another reason why this site is a great source of information.
great idea to post this up. I watch this but usually on a monthly basis as it definitely is a great economic indicator that becomes extremely useful in a time when people are trying to predict when the economy will recover. well, idiots out there can just stop predicting and starting watching the actual traffic!
Now that I think about it, its a bit odd that no one really posts this up frequently do they? Sounds like another TPC niche!
Jay
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