Buffett's Worrisome Economic Indicator: Railcar Loadings Continue to Decline

On CNBC Friday afternoon, I spoke about our bearish stance on the Dow Jones Transports and we are not alone, even Warren Buffett, in a Good Morning America interview, indicated he is concerned about the decline in freight traffic. The following is an excerpt from our research report on the US Transportation sector. We shall present our analysis in three parts; today Warren Buffett’s favorite indicator railcar loadings, tomorrow the truck tonnage index, and on Wednesday diesel demand and inventories.

Each week we receive the railcar loading report from Railfax. This report consolidates all railcar loads in North America. From this report we can determine whether or not shipments are increasing on a weekly basis.

These charts show the 13 week average year over year percentage change in railcar loadings. Not only do we look at total railcar loadings but we also examine intermodal traffic to determine the impact on the trucking industry. The charts clearly illustrate that shipments are down significantly on a yearly basis.

Drilling down into the weekly data we find that loadings are headed lower once again.

The charts above are the 4-week moving average of actual loaded units on all railroads. The pickup in shipments in the first quarter is evident, but so is the recent decline. The decline in both total rail traffic and intermodal traffic over the last 4 weeks correlated directly with the decline in distillate demand.

Disclosure: We are short IYT

Comments

[chargers_ru...:]

Mr Buffet should have been more concerned about congress allowing so many corporations to send jobs to China and Mexico. Did he voice his concern then? Anyone can see that the reason rail traffic is down is because all the jobs went overseas and the consumer is now tapped out . Thus with out money no one can buy anything.without jobs one cannot get credit. so...this is the end result. Enjoy everyone- you made your bed congress and big business- now lay in it!

Jul 13 04:02 PM

[Dave Wrixon:]

This just proves that the US GDP data is absolute bunk.

It seems to be a Government strategy to debase the educational system, so they can more easily pull the wool over the eyes of the electorate.

Jul 13 04:32 PM

[Rolandownth...:]

Can't help but wonder when the American people will find that we are no longer "America", but on the verge of a new banana republic.
Audit the FED......

Jul 14 12:27 AM

[ECONOMICS 101:]

freight = jobs

we have no jobs (they're all in Mexico and China) therefore no freight.

No surprises here.

by Johnathan Vrozos
johnathanvrozos.com

Jul 14 08:08 AM