The latest Railtime Indicators report shows just how severe the great recession has been. Although the latest sequential data continues to improve it is important not to lose sight of the forest for the trees. The recovery remains very fragile and the rail data is the surest sign of this weakness. The AAR reports that carloads for the full year 2009 posted their lowest totals since 1988. The full report follows:
What are the latest numbers for U.S. railroads?
- Good riddance to 2009. U.S. freight railroads completed a very difficult year by originating 1,241,293 carloads in December, an average of 248,259 carloads per week. That’s down 4.1% from December 2008’s average of 258,915 carloads per week and down 17.6% from December 2007’s average of 301,466.
- For the full year 2009, U.S. railroads originated 13,812,989 carloads, down 16.1% (2.6 million carloads) from the comparable period in 2008 and down 18.2% (3.1 million carloads) from 2007. 2009’s carload total (unadjusted for changes in rail car capacity) was the lowest for U.S. railroads since before 1988, when the AAR data series begins.
- Rail traffic always falls sharply in late December due to the holidays. This year, unusually heavy early-season snow in parts of the country also negatively affected rail traffic.
- Total U.S. rail carloads in December 2009 were 53,281 lower than in December 2008, mainly because of coal. Coal was down 96,022 carloads in December 2009 from December 2008. That’s equal to 19,200 fewer coal carloads, or around 175 110-car coal trains, per week. Rail carloads excluding coal were 42,741 (6.9%) higher in December 2009 than in December 2008.
- It’s useful to compare current rail traffic levels to the collapsed levels of a year ago. To use a boxing analogy, doing so shows if rail carloads have gotten up off the mat after nearly getting knocked out. And, in fact, for many commodities that seems to be happening. 12 of the 19 major commodity categories tracked by the AAR saw higher carloads in December 2009 than in December 2008.
- That said, U.S. rail traffic remains far below pre-collapse levels. To use the boxing analogy again, it’s not yet time to put away the smelling salts.
- U.S. intermodal traffic (which is not included in carload figures) totaled 912,778 trailers and containers in December 2009, an average of 182,556 per week. That’s up 2.5% from December 2008 (when the weekly average was 178,027 units) and down 11.5% from December 2007, when the weekly average was 206,236 trailers and containers.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.