Last week’s 12% decline looks like an aberration. Rail volumes were back in cliff diving mode this week as intermodal rail volume reported a year over year decline of 24%. The rail data remains severely depressed and is showing no signs of recovery. It is practically impossible to see a sharp economic recovery without improvement in this kind of data. Yesterday’s data from JB Hunt confirms the weakness.
I would continue to play the bullish side of this earnings trade in the coming weeks, but do not get fooled into thinking that the “better than expected” earnings represent a recovering economy. It is more a sign of the ignorance of the analyst community than anything else.
The AAR reports:
WASHINGTON, July 16, 2009 — The Association of American Railroads today reported that rail traffic remains down year over year for the week ended July 11, 2009. U.S railroads reported originating 262,210 cars, down 17.9 percent compared with the same week in 2008. Regionally, carloadings were down 12.8 percent in the West and 25.6 percent in the East. Rail carloadings were at their highest level in 14 weeks.
Intermodal volume of 176,887 trailers or containers was down 23.7 percent from the same week last year. Container volume fell 19.4 percent and trailer volume dropped 40.3 percent. Total volume on U.S. railroads for the week ending July 11 was estimated at 28 billion ton-miles, off 16.9 percent from the same week last year.
All 19 carload freight commodity groups were down from last year, with declines ranging from 4.2 percent for the catch-all category labeled “all other carloads” to 58.4 percent for metals and metal products.
For the first 27 weeks of 2009, U.S. railroads reported cumulative volume of 7,069,102 carloads, down 19.2 percent from 2008; 4,993,245 trailers or containers, down 17.1 percent, and total volume of an estimated 751.7 billion ton-miles, down 18.2 percent.