Economy

AAR Reports Increased Rail Traffic

October 4, 2014

Steel Market Update (SMU) was reading the most recent Armada Corporate Intelligence report where they referred to the railroad carload statistics as the “secret weapon” known to the big names in the investing business. The Association of American Railroads (AAR) weekly reports are followed by Armada because, “…it will give you weeks of warning about economic changes long before we see it in other economic figures. Some of the metrics in the report have more than an 80% correlation between it and GDP.” (Dr. Chris Kuehl of Armada was one of our keynote speakers at our 2014 Steel Summit)

Armada pointed out in an analysis in their Corporate Intelligence report (which SMU highly recommends to our readers) that the AAR data suggests strong economic growth will continue in the United States. However, the automotive data provided a bit of contrary reading, “Although it is up (YTD up by 4.3%), this is much slower growth rate than we have seen in the past (arguably against some strong growth metrics). Since automotive has been one of the stronger components of growth to help fuel the recovery, there is some concern that this weakness could be showing a slowing of the sector. We need to monitor it and see if it improves.”

SMU also noted in the AAR rail traffic data the “Metallic ores and Metals” carloads were down for the week ending September 27th by 8.0 percent. However, compared to 2013 the average per week data is up 4.3 percent.

Here is the press release from the Association of American Railroads:

WASHINGTON, D.C. – Oct. 2, 2014 –The Association of American Railroads (AAR) today reported increased U.S. rail traffic for September 2014, with both carload and intermodal volume increasing compared with September 2013. U.S. Class I railroads originated 1,190,431 carloads in September 2014, up 2.7 percent, or 30,837 carloads, over September 2013. September marked the seventh straight month of year-over-year carload increases, something that hasn’t happened since early 2011. Intermodal traffic in September totaled 1,073,042 containers and trailers, up 4.5 percent, or 45,803 units, over September 2013. The second, third, and fourth weeks of September 2014 were the three highest-volume intermodal weeks in history for U.S. railroads.

Fifteen of the 20 commodity categories tracked by the AAR each month saw year-over-year carload increases in September. Commodities with carload increases in September 2014 over September 2013 were led by petroleum and petroleum products, up 14,375 carloads, or 28.1 percent. Carloads of crushed stone, gravel, and sand were up 11,423, or 12.6 percent, and carloads of primary metal products were up 2,931, or 7 percent. Carloads of grain rose 2,751, or 4.1 percent. Year- over-year U.S. grain carloads have risen for 12 months in a row.

Commodities with carload declines in September 2014 from September 2013 were led by coal, down 8,109 carloads, or 1.7 percent. Excluding coal, U.S. rail carloads were up 38,946 carloads, or 5.6 percent, in September 2014 over September 2013. Excluding coal and grain, U.S. rail carloads were up 36,195, or 5.8 percent, in September 2014.

“As has generally been the case in recent months, U.S. freight rail traffic in September was consistent with an economy that’s growing at a steady pace. We think that will probably continue for the foreseeable future,” said AAR Senior Vice President John T. Gray.

AAR today also reported increased rail traffic for the week ending Sept. 27, 2014. U.S. railroads originated 301,863 carloads last week, up 1.6 percent compared with the same week last year, while intermodal volume for the week totaled 275,071 units, up 2 percent compared with the same week last year. Total U.S. rail traffic for the week was 576,934 carloads and intermodal units, up 1.8 percent compared with the same week last year.

Five of the 10 carload commodity groups tracked on a weekly basis posted increases compared with the same week in 2013, led by petroleum and petroleum products, with 16,759 carloads, up 24.9 percent. Commodities that posted a decrease were led by motor vehicles and parts, with 17,235, down 8 percent.

For the first 39 weeks of 2014, U.S. railroads reported cumulative volume of 11,322,823 carloads, up 3.5 percent from the same point last year, and 10,077,330 intermodal units, up 5.5 percent from last year. Total U.S. traffic for the first 39 weeks of 2014 was 21,400,153 carloads and intermodal units, up 4.4 percent from last year.

Canadian railroads reported 86,881 carloads for the week, down 0.2 percent compared with the same week last year, and 62,532 intermodal units, up 7.5 percent compared with 2013. For the first 39 weeks of 2014, Canadian railroads reported cumulative volume of 3,102,252 carloads, up 1.3 percent from the same point last year, and 2,232,368 intermodal units, up 7.1 percent from last year.

Mexican railroads reported 15,680 carloads for the week, up 3.4 percent compared with the same week last year, and 12,372 intermodal units, up 0.7 percent. Cumulative volume on Mexican railroads for the first 39 weeks of 2014 is 609,121 carloads, up 1.7 percent from the same point last year, and 408,512 intermodal units, up 4.2 percent.

Combined North American rail volume for the first 39 weeks of 2014 on 13 reporting U.S., Canadian and Mexican railroads totaled 15,034,196 carloads, up 3 percent compared with the same point last year, and 12,718,210 trailers and containers, up 5.8 percent compared with last year.