RAIL TRAFFIC CONTINUES TO RISE
Few things have been more confusing during this recovery than rail traffic volumes. What has normally proven to be a fairly reliable leading indicator has lagged during the recovery and is hitting new highs just when the global economy appears to be hitting an air pocket. This week’s traffic data was once again very strong. Via the AAR:
“The Association of American Railroads (AAR) today reported that intermodal volume on U.S. freight railroads for the week ended June 19, 2010, reached its highest level since the 45th week of 2008. Intermodal traffic totaled 227,985 trailers and containers, up 21.2 percent from last year but down .2 percent from 2008. In order to offer a complete picture of the progress in rail traffic, AAR now reports 2010 weekly rail traffic with comparison weeks in both 2009 and 2008.Compared with the same week in 2009, container volume increased 23.2 percent while trailer volume rose 10.5 percent. Compared with the same week in 2008, container volume was up 8.8 percent while trailer volume fell 32.8 percent.
Rail carloads last week also posted gains over the comparable week in 2009. U.S. railroads originated 284,913 carloads during the week ended June 19, up 9.2 percent from the comparable week in 2009, but down 10 percent from 2008.
Carload volume on Eastern railroads was up 12.2 percent from last year, but down 15.8 percent from 2008. In the West, carload volume was up 7.2 percent from last year but down 5.6 percent from two years ago.
Fifteen of the 19 carload commodities groups increased from the comparable week in 2009, with metallic ores, up 108.9 percent, and metals and metal products, up 78.2 percent, posting the most significant gains. Other notable gains include coke, up 52.6 percent, and motor vehicles and products, up 49.8 percent. Only one commodity group – coke, up .2 percent – posted an increase over 2008 levels.
For the first 24 weeks of 2010, U.S. railroads reported cumulative volume of 6,767,470 carloads, up 7.2 percent from 2009, but down 13.4 percent from 2008; 4,976,377 trailers or containers, up 11.7 percent from 2009, but down 7.3 percent from 2008.”
TPC, did you also take a look at copper.
My friend, the news is uniformly negative and sentiment is in the toilet again. Yet look at the non-PM metals here. Copper still fairly strong, etc.
I wonder when we’ll see lumber futures move.
10 million Chinese urbanizing every year. India as well. I just think that commodities are where it’s at.
Also check out corn. Read a great piece on ZH a few weeks ago by former GS alum that said corn trades higher in Chinese markets than you can buy it in the US. And ag commodities have gotten destroyed.
Thinking about buying that etf CORN for a little bit and see where she goes! Hope all is well buddy.
Oh, there is little doubt in my mind that the global economy is rolling over again. The weakness in the private sector is extreme and going to get worse as austerity measures kick in. The Euro remains the crux of the issue here. Nothing has been resolved there so it’s ridiculous to think that the market will sustain a recovery. We’re seeing the impact spread like Ebola….
Hope you’re well.
I would refer to what happened to Europe in the Great Depression. They bounced back pretty quick comparatively.
If these morons do force deflation in the Euro zone — which I have been pounding on the table for months that that’s what would happen and would be the best thing for Germany — the real EU country that matters, then that is what it will be.
But if Euro sucks, where does capital flow… Back in the Depression capital ran to the US dollar because it was MONEY backed by the ultimate money GOLD. Thus we had horrible deflation and that persisted for years.
But the dollar is really no longer “money”. M. Faber’s great comment about readjusting what you should do to preserve wealth, view equities/commodities as a wealth preserver.
I still think a lot of deleveraging is going on and needs to, but I’m not super pessimistic about the global economy as a whole. Europe is a basket case – but that’s been the case for a while.
Hopefully obama gets stopped from putting the same shackles on us. Judge’s ruling ending the moratorium is beautiful, and should help our economy in a big way.
Best thing is devalue the currency, recapitalize, force some bks and bondholders to take haircuts, and move on. More stimulus directly to consumer for once and do infrastructure. And let the patient recover.
God I wish they would just bulldoze some of the housing inventory and put homebuilders on the dole for three years preventing any more houses being built unless it is per specific contract. Same thing with retail/office. There is just too much INVENTORY right now, it needs to be destroyed or cleared.
And just one more thing, one good action taken by FDR was to reprice the $ in terms of gold big time, which is why the markets rose after 1933. History is interesting. Again, devalue and move on.
I think Adam Smith said governments always default… Lessons never learned.
joblessness = 0 consumer demand; joblessness = 0 consumer demand; joblessness = 0 consumer demand; joblessness = 0 consumer demand; joblessness = 0 consumer demand; joblessness = 0 consumer demand….should I reiterate?
Rail traffic is meaningless. The consumer is tapped out, middle and lower income net worth is down due to the drop in housing prices and prices continue to deteriorate. Local governments are having to raise taxes, layoff workers and cut back on capital expenditures. Citizens of the EU are feeling poorer as weak members liabilities are being transferred onto strong members balance sheets ie taxes are going up across the board. Taxes will increase as citizens are made to pay for financial malfeasance and taxes are a force of friction that works against the velocity of money, globally.
Watching this cluster *#@% unfold is like watching from the outside of an windowless elevator that is accelerates toward the earth…those in the elevator are unaware of the ultimate outcome while those observing from a distance understand the ultimate outcome.
Any optimism is misplaced. I don’t think rail traffic is an indicator of what the average American is dealing with any more than the stock market is. I know too many people who cannot find a job or who cannot earn enough to pay for the inflating essentials as well as taxes. Without more government stimulus or unemployment extensions, it will only get worse–and it may get worse anyway, but at least there’d be less suffering.
Anyone know the answer to these 2 questions?
Where is shipping traffic (remember in 2008 when the big ports were essentially closed)?
How about ship builder orders?
These guys tend to track w/ rail freight volume as well, but I think also give some indication of global trade as well the freight volume does not.
Still the freight volume could simply mean inventories are down (bare shelves syndrome)? Does it track w/ that?
TPC,
To anyone who has done scheduling this is an easy call. The railcars are simply following the increased demand of refilling the pipeline on catching up on the inventories. They will soon start to roll over as there is no sustained demand, just like the Baltic Dry Index has rolled over in the last two weeks. Factories have refilled their inventory pipelines.
Hasn’t the BDI been rolling over for 5 months now??
@billw
thanks! That was most helpful! I was suspicious that this was the case…
Kudos!