Rail Traffic Starting to Show Signs of Weakness

The trend in rail traffic has moderated substantially in the last few months as the 12 week moving average in intermodal traffic hit its lowest reading since 2011.  The current moving average of 1.34% is consistent with an extremely sluggish economy and one that has come well off the early boom period of the beginning of the recovery when rail traffic was consistently experiencing 10%+ year over year readings.

AAR has more details on this week’s data:

“The Association of American Railroads (AAR) today reported declines in weekly rail traffic for the week ending January 5, 2013, with U.S. railroads originating 241,682 carloads, down 12.1 percent compared with the same week last year. Intermodal volume for the week totaled 178,317 trailers and containers, down 8 percent compared with the same week last year. Traffic volume was likely impacted by the New Year’s holiday, which fell on a Monday and Tuesday in 2013, as opposed to Saturday and Sunday in 2012.

Four of the 20 carload commodity groups posted increases compared with the same week in 2012, with petroleum products, up 53.6 percent; coke, up 12.5 percent, and lumber and wood products, up 6 percent. The groups showing a decrease in weekly traffic included iron and steel scrap, down 29.3 percent; motor vehicles and equipment, down 20.6 percent, and coal, down 19.2 percent.

Weekly carload volume on Eastern railroads was down 12.3 percent compared with the same week last year. In the West, weekly carload volume was down 12 percent compared with the same week in 2012.”

Chart via Orcam Investment Research:

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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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  • barak

    from a market perspective, the problem is that none of this is priced in. the conference board’s LEI went nowhere in the last 6 months, and rail traffic is confirming the slowdown. on the other hand, the market is making new highs and sentiment is running high.

  • Ilya

    Holiday weeks are notoriously noisy. Need to wait till next week to average all out.

  • freemarketeer

    It’s a 12-week average of the Y/Y period, so really shouldn’t be that affected. Sandy, on the other hand, might have had a sizeable impact.

  • Ilya

    Freemarketeer. Look at the underlying week noise. 10% yoy gain followed by 10% yoy drop. That’s a 20% swing week over week. Even divided by 12 gives you a 2% drop in the average. Classic holiday noise. I am a bear hear and still cannot take this data as supportive of a slowdown. Sit and wait

  • Alex P

    The decline in rail traffic is 100% attributed to the switch to nat gas from coal at utility plants.

  • http://www.nowandfutures.com bart

    AAR rail traffic *totals* have been negative on a year over year basis since September. That’s hardly “noise”.

    Cass freight shipments show similar declines.

    ATA truck tonnage index has been negative YoY for 3 months.

    Baltic, Panamax and Harpex freight indexes and Shanghai container indexes have been negative YoY for at least 5 months.

    The RPI (restaurant index) has been negative YoY for 2-3 months.

    Food Services and Drinking Places (NSA sales growth) has been negative after a CPI-U correction for over 7 months.

    Long Beach plus LA container traffic has been negative YoY for 7 months.

    Philly Fed index adjustments yesterday are quite bearish.

    etc.

  • http://www.nowandfutures.com bart

    You obviously have not looked at the breakdowns at AAR.

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

    Total traffic is totally misleading. You’d have thought we were in recession a year ago if you followed it…

  • http://www.nowandfutures.com bart

    Regular non intermodal traffic doesn’t matter since orders don’t need to be filled and don’t matter to GDP?

    Does either total rail traffic or intermodal only align perfectly with recession starts? No?… I didn’t think so.

    Total debt doesn’t matter either since we owe it to ourselves.
    /sarcasm

    The other stats also remain quite bearish, and quite well aligned with total rail traffic being substantially down — and many other stats besides those noted are down.

  • Gary_UK

    Recovery?

    Nah, just new base money created to prolong the myth.

    America going down hard, will it stay down this time.

    Maybe one more gasp for air, next time you drown in currency.

  • http://www.fanbrowser.com/ Cowpoke

    When rail cars go back and forth among countries and never unload cargo, does that affect the rail metric?

    it certainly seems to affect someones bottom line:

    A cargo train filled with biofuels crossed the border between the US and Canada 24 times between the 15th of June and the 28th of June 2010; not once did it unload its cargo, yet it still earned millions of dollars…

    http://www.zerohedge.com/news/2013-01-02/why-did-train-carrying-biofuel-cross-border-24-times-and-never-unload

    Zero Hedge, Love em or hate em, you gota appreciate em.