The Week In Rail: Carloads For The Big 6

As the week meandered to a close, a peek at performance by transportation stocks paints a mixed picture of the economy. Transportation metrics such as freight volumes are considered leading indicators of economic activity. Does the mixed message relayed by freight volumes contradicts the Fed's assessment of a vibrant economy? The picture might be clearer as the new year dawns, as research reveals that transportation leads economic activity by four months.

Data released by the Association of American Railroads showed petroleum products continued to be weak, with weekly originated carloads down 19.6 percent year-over-year for the week ended September 17 compared to a 27.3 percent decline last week. Higher refined product inventories led to slackness in the movement of this commodity.

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Meanwhile, in its "Crazy Train" report, CLSA noted that Canadian National Railway (USA) CNI reported a 3.6 percent year-over-year increase in weekly carloads to 106,153, reversing all of the 2.6 percent drop in the previous week. Intermodal carloads for the week also improved. Automotive and metallic ore volume, according to the firm, supported the upside.

Weighed down by weakness in coal, CSX Corporation CSX experienced a 6.1 percent drop in total carloads to 126,593, with intermodal; units down a steeper 7.6 percent.

Notwithstanding a 3 percent increase in intermodal volumes, Norfolk Southern Corp. NSC's total card loads fell 0.6 percent to 146,682. However, quarterly numbers were impacted by lower coal and intermodal volumes, partly offset by metals & ores recovery.

For Canadian Pacific Railway Limited (USA) CP, both originated and received carloads rebounded in the week, rising 1.3 percent to 52,085, following a 7.6 percent decline last week. Petroleum shipments fell by one-half, although recovering grain and coal volumes helped counter the weakness.

Kansas City Southern KSU saw its carloads rising 0.3 percent, thanks to strong intermodal volumes. Motor vehicle shipments remained strong. However, petroleum and coal shipments were weak.

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