A few things to consider as you read this week’s AAR traffic data...

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Weekly Rail Traffic for the Week Ending March 14, 2020: CLICK HERE

 

Here is a brief summary that looks at the trailing 4-week traffic trends. (Not just last week's numbers.)

The Susquehanna Financial Group is my go-to source for the trending 4-week look. It’s a critical key watched by the Class I senior executives.
 
Total US rail volumes decreased 7.5% Y/Y ... versus the -8.4% 4-wk trend.
 
By Traffic Category:
  • Merchandise was +0.8% Y/Y (vs. +2.0% 4-wks).
  • Intermodal was -9.1% Y/Y (vs. -10.5% 4-wks).
  • In bulk, Grain was +6.9% Y/Y (vs. +0.8% 4-wks).
  • Coal was -22.8% Y/Y (vs. -23.4% 4-wks).

 

GEOGRAPHY

Western / Central:

  • UNP carloads -0.5% (vs. -5.4% 4-wks)
  • BNSF carloads -6.3% (vs. -8.9% 4-wks)
  • KSU carloads -0.5% (vs. -1.5% 4-wks)

Eastern States:

  • CSX carloads -5.4% (vs. -1.1% 4-wks)
  • NSC carloads -17.4% (vs. -13.7% 4-wks)

Canada:

  • CP RTMs +12.8% (vs. +17.3% 4-wk)
  • CNI RTMs +3.7% (vs. -0.8% 4-wk)

 

HERE ARE OUTLOOK ISSUES you might want to consider for possible twists and turns ahead for the rail freight market:

In the coming weeks ...

  1. The different oil prices (spreads) will start to favor coastal and offshore oil sources — and likely cause a decline Y/Y of inland crude oil prices of delivered oil — and possibly lower crude oil movement bt rail movements from ND and Alberta origins. The price differential bears watching. If ethanol and crude - by rail drop......track storage demand will increase.
  2. Sales of new automobiles are likely to fall — as personal and family income is at higher risk. That at some point will impact future week to week automobile traffic volumes moved by rail. Auto carload traffic is highly profitable.  Result?  More cars stored.
  3. On a positive note, there should be some marginal increase in rail intermodal over the coming weeks out of the west coast ports as vessels from China start to arrive more frequently.
  4. There might be some domestic intermodal and carload merchandise increases as regional warehouses that serve the food industry try to restock.
  5. There is an increasing risk that an overall consumer confidence drop will affect a wide variety of different commodities, including wood for home construction/repairs.
  6. Corporations and governments will also be deferring CAPEX projects that normally require movement of everything from primary metals to construction-grade stone and gravel.  All railway hauled products.

 

ARE YOU ALL PREPARED for such outcomes over the next four months or longer?

What’s a prudent strategy for those in our rail sector?