Market Overview

Rail Carloads See False Positive On Wonky Comp

Rail Carloads See False Positive On Wonky Comp

Class I rail carloads are up in the recent week on a year-over-year basis according to the Association of American Railroads, but the prior year comparison includes the Thanksgiving holiday whereas the 2019 period does not.

Total U.S. Class I rail traffic increased 10.6% year-over-year in week 47, which ended Nov. 23. Even with the favorable comparison to 2018, coal (-7.6%) and pulp and paper products (-13.2%) saw declines.

The four-week average may be the best metric to view versus the distorted weekly comparison. Total traffic was 8% lower by that measure, with some of the largest commodities moved via rail seeing continued declines – coal (-15.4%), total intermodal units (-7.9%), intermodal containers (-6.2%), nonmetallic minerals (-5.3%), agricultural and food products (-3%) and chemicals and petroleum (-1.5%).

Total Carloads (USA) – SONAR: RTOTC.USA

Year-to-date, total U.S. Class I rail traffic is down 4.2% year-over-year through week 47. Total North American traffic is 3.3% lower over the same period. The prior four-week average for North American traffic is down 7.2%.

The declines were more pronounced on the Canadian front. Total rail traffic declined 9.2% year-over-year for the week with intermodal traffic (+0.2%) basically flat. The declines were seen across all commodities. The prior four-week average is less dire, down 6.1%, with agricultural and food products (+1.6%) gaining traction after a later than normal grain harvest.

Canadian National (NYSE: CNI) posted a 28% year-over-year carload decline in the recent week, down 7.3% on average for the prior four weeks. The company has been embroiled in a labor dispute with roughly 3,200 of its conductors, trainspersons and yard workers. The strike, which began Nov. 19, appears to be resolved as the Teamsters reached a tentative agreement with CN requiring workers to resume their duties today, Nov. 27.

By comparison, Canadian Pacific's (NYSE: CP) carloads were up 7.4% in the recent week and only 3.7% lower on average for the prior four weeks when compared to 2018.

Intermodal units for both Canadian rails were basically flat in the recent week. 

Sagging rail volumes and precision scheduled railroading (PSR) initiatives have taken a toll on rail headcount, which reached a new low in October. The total number of U.S. Class I rail employees was 134,582, down 9.5% year-over-year, a new 2019 low. Train and engine crews were reduced by 11.8%.

Image Sourced from Pixabay

Posted-In: Freight FreightwavesEarnings News Commodities Global Markets General


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