Total N. American rail traffic last week leaped to the highest levels in the 5 years I began tracking the series here. At 733k carloads it passed the previous highs despite both oil/chemical shipments and coal shipments falling slightly. Strength was seen in intermodal, auto, metals and stone products. The metal and stone product categories sit at or just below multi year record levels. Think retailers beginning to stock shelves for Christmas season and construction beginning to pick up when absorbing the increases. As for the carriers, Burlington Northern [merged with Berkshire Hathaway (BRK.A) (BRK.B)] and Canadian National Railway Company (CNI) saw their traffic also reach the highest level since I began tracking the series.
This is an extremely encouraging rail report. Now, the one caution I would urge is that this is the first reporting week post Labor Day so we always see a rebound in traffic. BUT, the size and degree of the rebound is not something we have seen in the last several years. It will bear watching this week to see if this is just pull forward or something else. Now, typically rail traffic will rise slightly or flatten over the next 3-4 weeks and then begin a gradual decline through the end of the year. That is the historic pattern so anything that happens will be measured against that pattern.
Here is the chart:
If we go back both YOY and to the previous high overall level, we’ll find that the oil/coal combination is essentially flat so that tells us even more affirmatively that the rail traffic growth is organic growth in the US economy, not some structural energy shift that is goosing #’s.
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