RAIL TRAFFIC CONTINUES TO MAKE MODERATE GAINS

Another week, another decent rail report.  This data is still consistent with a growing economy, but not a healthy growing economy.  Muddle through continues (via the AAR):

“The Association of American Railroads (AAR) today reported a gain in weekly rail traffic, with U.S. railroads originating 302,500 carloads for the week ending October 8, 2011, up 2.1 percent compared with the same week last year. Intermodal volume for the week totaled 241,999 trailers and containers, up 2.4 percent compared with the same week last year.

Eleven of the 20 carload commodity groups posted increases from the comparable week in 2010, including: petroleum products, up 28.3 percent; non-metallic minerals, up 19.6 percent; and motor vehicles and equipment, up 11.1 percent. Groups showing a decrease in weekly traffic included: farm products excluding grain, down 14.6 percent; and waste and nonferrous scrap, down 11.5 percent.

Weekly carload volume on Eastern railroads was up 2.2 percent compared with the same week last year. In the West, weekly carload volume was up 2.1 percent compared with the same week in 2010.

For the first 40 weeks of 2011, U.S. railroads reported cumulative volume of 11,631,650 carloads, up 1.8 percent from the same point last year, and 9,123,225 trailers and containers, up 5.4 percent from last year.”

Source: AAR

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Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

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  • Austin

    Rail traffic and retail sales are being ‘subsidized’ by double digit deficits. I’m not saying that’s a good or bad thing. I’m just saying…

  • LRM

    I keep wondering why the rail shows mild expansion and other indicators such as the Ceridian-UCLA CPI indicator is showing such a decline.
    http://www.ceridianindex.com/
    and the commentary video
    http://www.ceridianindex.com/multimedia/video/September-PCI-Falls/
    I keep wondering if there has been some shift in the way goods are being transported for these two indicators to be sating different things.
    Have truckers started to use more rail to control costs?

  • KB

    Cullen,

    Adding to LRM comment – indeed there is weird discrepancy between AAR data and other transportation indicators. Ceridian index of diesel fuel usage is in negative trend – meaning some downside in truck transportation numbers, and, actually in railroads too – they also use diesel fuel.
    Also, there are a number of pieces commenting on volumes in major US ports (containers) – and all of them imply negative numbers comparing to last year.

    Assuming all this is correct, how railroads manage to show volume increases, especially intermodal?

  • John C

    Cullen,

    Thank you for your response to my querry on the potential for a shift in transport modes – collectively they continue to indicate an acceleration in the global economic downturn.

    Could our next bubble be in Government Stats – you can fudge them for so long, eventually no one believes them? I am not suggesting out-and-out corruption but I am suggesting favourably skewing numbers in the hope that the “recovery” enables timely “number” resetting?

    As an example the ECB Bank Stress Tests a little over 3-4 months ago suggested the safest Tier 1 Bank was Dexia. We now know differently – however the Financial World simply accepts this as an acceptable misrepresentation. Maybe Sovereigns around the world are massaging numbers to buy time? Time was a luxury Sovereigns thought they had 3 years ago – but it increasing seems to be running out? How people believe the “M&S” show really have the answers is a mystery to me – surely if they did they would be shouting from every roof top in Berlin and Paris!

    I remain confused in the direction of the short term but very clear about the long term.

  • http://www.pragcap.com Cullen Roche

    It all seems to be adding up to my general outlook in the USA. Not great, but not collapsing. It’s just sort of a bleh economy….

  • Malmo

    The economy is in a holding pattern, but it’s still very fragile. If Europe somehow kicks the can down the road then perhaps we get a stimulative catalyst. However, along with that might come a renewal of animal spirits and more cost push inflation, which will in short order muck it all up again. If Europe fails to kick the can, then all bets are off given the likely contagion that would be immediately felt across the pond in America. And this doesn’t even take into account deficit hawk mania not only at the national level, but state and local levels to boot.

    To quote a buddy over at another trading forum: ” There really is no catalyst for a bull market. There never was. What is the next big thing. We need the internet of the 90s, the housing market in 2000. Right now there is nothing changing the world except for AAPL. Give me something that will change the way we live.”

    So it’s like Cullen said, we’ll probably muddle through for awhile, but I don’t think the muddle through meme is going to cut it with the millions that are hurting. We get that reality and it’ll spawn an OWS to the tenth power. Not sure how that’s going to act as a positive economic bromide?

  • Andrew P

    Coal is loaded into rail cars, taken to a ship, and sent straight to China.

  • Clonal Antibody

    Cullen,

    From September 2011 Diesel Index Trend Shows Economic Contraction Possible

    Quote:

    Many will think me crazy, but this is one of the most important indexes for understanding what the economy is going to do in the coming months. Diesel fuel is the blood of the American distribution system – it is moving materials and goods which will be sold at retail level up to several months after the diesel is used.

    The Ceridian-UCLA Pulse of Commerce Index™ (PCI), which is based on diesel consumption and designed to mimic GDP, has declined 1.0% in September 2011. Econintersect uses the PCI raw data to help forecast Main Street economy. However, this adjusted index is now showing a 4.3% quarter-over-quarter drop, and is negative 0.2% year-over-year.
    .
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  • Alex

    Cullen, it is interesting to note that the rail traffic data contrasts with the port traffic data that is clearly signalling contraction. Now I have not done sufficient work on that but one might be lagging…guess which…

  • Clonal Antibody

    Domestic shipping is shifting as much traffic as it can from road transport to cheaper more fuel efficient rail transport. See my reference to lower diesel consumption. This is still a sign of businesses cutting costs

  • LRM

    Just wanted to add to this commentary that I have discussed this discrepency between rail and trucking with someone who uses trucking for goods(>30 loads each week) He mentioned that a lot of US trucking firms have modernized their fleets and that fuel efficiency has been improved by a remarkable % so some of this may be showing up in a decline in diesel use. Just putting it out there for consideration

  • quark

    I have reas that port traffic is lower on a yr over yr monthly basis. That would indicate a lowee reading for rail next month.