Here’s some interesting data from this week’s report on U.S. rail traffic from the American Association of Railroads:
1. On a year-to-date (YTD) basis through the week ending August 11, total rail volume of 9,005,952 carloads this year is down by 2.4% compared to last year’s loadings of 9,231,927 carloads from January through mid-August.
2. Of the 20 different categories of carload shipments, coal totally dominates this type of rail shipping, and made up 44% of the shipping activity in 2011 from January to mid-August. This year, coal shipments represented about 41% of total rail car loadings.
3. Due in part to the switch from coal to natural gas for electric power generation, coal shipments by rail YTD in 2012 are down by 9.4%, from 4,075,000 carloads of coal last year to 3,693,000 this year from January-August.
4. If we take out coal shipments, rail carload volume is actually up by 3% this year for the other 19 categories, close to the 3.6% YTD increase in the intermodal form of rail shipping for trailers and containers (Note: intermodal shipments are not broken down by category).
Bottom Line: Coal shipments by rail exert a huge influence on overall rail carload volume because coal’s share of total shipping by rail is so high (41-44%). Therefore, it’s only because of the decline in coal shipments this year that overall rail carload volume has fallen. Take out coal shipments, and carload volume then shows a healthy 3% increase. Along with the 3.6% increase in intermodal volume, the overall increase in non-coal shipments this year presents a much more positive picture of the amount of inputs, raw materials, commodities, chemicals, vehicles, parts, products, etc. moving around the country, destined for some factory, plant, construction project or car dealership. And like I summarized yesterday, the three largest contributors to increased carload shipments so far this year are petroleum (+40.2% YTD), motor vehicles and equipment (+21.4%), and lumber (+12.2%).
So the economy’s doing better than we thought once we exclude coal from carload rail shipments, and the environment’s getting better because coal shipments to electric utilities are declining. And the petroleum, housing and auto industries are showing strong gains over last year for shipments of key inputs and outputs for those sectors.