Unexpected Jump in Rail Freight Carloads?

by: Wildebeest

The Association of American Railroads [AAR] released the latest weekly rail freight traffic report today:

WASHINGTON, D.C. – Aug. 5, 2010 – The Association of American Railroads today reported that for the week ending July 31, 2010, U.S. railroads reported the highest traffic levels of 2010 for both carload and intermodal traffic. U.S. railroads originated 300,292 carloads for the week, up 9.4 percent compared with the same week in 2009, but down 10.6 percent from the same week in 2008. In order to offer a complete picture of the progress in rail traffic, AAR reports 2010 weekly rail traffic with comparison weeks in both 2009 and 2008. Note that U.S. rail traffic fell sharply in fall 2008, when the financial crisis took hold.

The following charts show intermodal and carloads rail freight volumes since 2007. For the last couple of months carload volumes had been approximately 13% below 2008 volumes. This week carload volumes seem to have increased dramatically -- now only 10.6% below 2008 levels. My tack on this is that when you line up the charts for several years, the pattern of carload volumes seems to be following the same path as in 2007 and 2008, but at a lower level. In other words the weekly and seasonal fluctuations seem to be the same. If that is to continue then we can expect another slight increase next week followed by a drop, recovery, and a larger drop over labor day. So I guess the two scenarios from here are that bulls will see this as the start of an upward trend whereas I see this as a continuation of a basically flat carload volumes chart. We should know the answer by Labor day weekend (Click charts to enlarge).

Intermodal rail freight has been stronger than carloads this year, i.e. closer to pre-crash volumes than carloads, due to the recovery in port activity.

The carload data is divided by the AAR into 18 specific categories (plus a 19th called "other"). Below are the charts for each of the 18 individual categories. The same color coding used in the first two charts above applies: black -- 2007; orange -- 2008; green -- 2009; blue -- 2010. Please click on the images below to enlarge them.

Disclosure: No positions