Rail begins the year on a down note

Trains Magazine General Discussion
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Freight Traffic on U.S. Railroads Down at Start of New Year

Contact: Tom White
(202) 639-2556
FOR IMMEDIATE RELEASE

Freight Traffic on U.S. Railroads Down at Start of New Year

WASHINGTON, January 11, 2007 — Freight traffic on U.S. railroads was off during the first week of 2007 in comparison with 2006’s initial week, the Association of American Railroads (AAR) reported today. Both weeks included the New Year holiday.

Carload freight totaled 286,752 cars, down 7.2 percent from 2006, with loadings down 9.2 percent in the East and 5.7 percent in the West. Intermodal volume of 188,585 trailers or containers was off 1.8 percent from last year. Total volume was estimated at 29.0 billion ton-miles, off 6.1 percent from 2006.

Canadian railroads reported volume of 69,753 cars, down 0.4 percent from last year, and 32,464 trailers or containers, off 7.3 percent.

Combined volume for the first week of 2007 on 13 reporting U.S. and Canadian railroads totaled 356,505 carloads, down 6.0 percent from last year, and 221,049 trailers and containers, down 2.6 percent from last year.

Mexican railroad Kansas City Southern de México reported volume of 8,018 carloads, down 25.8 percent from the first week of 2006. Intermodal volume totaled 2,285 trailers or containers, down 2.0 percent from last year.

Railroads reporting to AAR account for 89 percent of U.S. carload freight and 98 percent of rail intermodal volume. When the U.S. operations of Canadian railroads are included, the figures increase to 96 percent and 100 percent. The Canadian railroads reporting to the AAR account for 91 percent of Canadian rail traffic. Railroads provide more than 40 percent of U.S. intercity freight transportation, more than any other mode, and rail traffic figures are regarded as an important economic indicator.

AAR is the world’s leading railroad p

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this always happens after christmas rush…things slow down for a few months… also…the thing that this artical dosnt tell you as far as the railroads being used as economic indicators… the railroads are a reactionary indicator… we are the last to feel a slow down… when production and consumer spending slows down… the railroads feel it later becouse the other factors happend frist…

and on one more note… with the changeing of the gaurd so to speak in DC with the Dems gaining controll from the republicans in both houses of congress… the economoy is going to studder a little bit untill bissnesses see how the new goverment body is… its funny now politics and the economy go hand in hand like that…

csx engineer

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Rail Car and Intermodal Loadings are considered a Leading Economic Indicator since they indicate what businesses are doing. The figures quoted are comparing the first week of 2007 to the first week of 2006, so it is an apples to apples comparison. So for at least one week the one sign is pointing to a slowing economy. However one week does not a trend make.

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what im getting at is that they are a reactionary indecator… they dont realy show the true scope of what businesses are doing untill they put out there quarterly reports that show the amout of biz they are actuly doing… if the orders at a plant are down for a week…the next few weeks shiping numbers are going to be down too…hence the reationary nature of this indicator… in the the long run with months of data to spot trends in upswings in shipping or downturns in shipping can be used to better gauge the overall “health” of the economy… transportation is always the last to feel any slowdowns or any pickups in the economy simply becouse of the differnces that occure between production of the product to be shiped and the time it aculy is ready to be moved by rail …truck…boat…rikshaw… what ever… the num

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From a statistician’s point of view, the popular, “This week versus this week last year,” is pretty meaningless. All it takes is one good weather event, or a labor problem, to skew the figures all out of shape.

Apropos of which, what impact did all that white stuff have on rail traffic?

At least with a quarterly report, the effect of a single blizzard can be cancelled out. That makes it a much more useful indicator.

Chuck (modeling Central Japan in September, 1964)

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There are three types of economic indicators (sorry, I’m not exactly an economics kind of guy, but I do tend to watch the market closely).

A leading indicator is an indicator that does a fairly good job of predicting an economic change. An example of this might be factory orders. If factory orders are down, that would be an indication that the economy is headed downward.

A coincident indicator is an indicator that says what the economy is doing. An example of this might be factory production.

A trailing indicator is an indicator that confirms - after the fact - that the economy has changed. An example of this might be factory inventories.

Since rail/truck shipping is based on production, it would be considered a coincident indicator, not a trailing or leading indicator.

As of the end of October, all three indicators were on the rise.

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If this is just an indication of reduced imports, then there should be no real loss of rail income. After all, coal and grain shipments by rail can’t even keep up with demand right now, and those two are the big money makers for the railroads. Intermodal is still dependent on import volume to make up for relatively thin margins. A reduction of intermodal shipments isn’t going to hurt anyone stateside.

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Why, Gentlemen, we don’t need to call up all these highfalutin’ economic indicators to understand why shipping is slow:

The weather in the Eastern U.S. has been so darn mild lately that RR employees and their families are taking “mental health days” to cash in their Christmas gift cards from Barnes & Noble, Lowe’s, Target, etc. [D)]

And as for a leading indicator, look at how many people are investing in their first-ever, HDTV format sets. Sure, the curiously named “housing starts” are down, but they always are in winter, even mild ones.

Call me a cockeyed optimist, but slightly lower traffic may give the two or three mega rail systems that need it most a little breathing room to carry on vitally needed infrastructure repair.

And I can’t completely overlook the possibility that the two or three prior business years were bumper years: even if 2007 doesn’t exceed them that doesn’t mean that the industry is in a slump or going downhill in any salient respects. If certain lines consistently lose money and anger shareholders, that would be a potentially explosive problem.

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Hmm, according to the figures traffic was down more in the east than the west by quite a bit, down in Mexico and Canada too. Say where did the blizzard hit? Atlanta? The fact of the matter is, the blizzard had very little effect overall, the one that hit Denver would have had more effect. Did you ever notice that when the US Bureau of Mines issues their production statistics they are based on the railcar loadings? The problem with waiting for quarterly statistics, is that the information is very old by the time you get it. It can only be used to confirm what you already should know.

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Business Cycles, gentlemen and gentlewomen, Business Cycles.

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It is slowing down a bit .

ed

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One week doesn’t tell me much. Total carloads down 23,000: coal -7,000, vehicles and parts -5,000, grain and grain mill products -3000, lumber, wood products -2,000. Any surprises?

Intermodal units down 3500 to 188,500 plus.

Do they adjust for the length of the “week”?

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You are correct in that one week’s worth of data is rather meaningless. The stock market is certainly not expecting any bad economic news. Whenever the indexes are at all-time highs, the investors tend to get a little nervous, and any bad news, or even news that isn’t as good as expected, tends to send the market back down again.

By adjusting for the length of the week, do you mean accounting for holidays? No, not usually, although they did note that both 2006 and 2007 included New Year’s Day. If one year’s week had a holiday and the other year’s week didn’t, they would probably note that too.