The abysmal trends in rail freight continued this week as total intermodal freight declined 21% versus last year. AAR reported:
WASHINGTON, May 14, 2009 — Freight traffic on U.S. railroads remained sharply down from a year ago during the week ended May 9, the Association of American Railroads reported today.
U.S. railroads originated 249,576 cars during the week, down 25.8 percent from the comparison week in 2008, with loadings down 21.4 percent in the West and 31.7 percent in the East.
All 19 carload commodity groups were down from last year, with declines ranging from 10.7 percent for the catch-all category of all other carloads to 64.7 percent for metals and metal products.
Reports from across the border were equally weak. Canadian volume was down 35% while Mexican volumes were off 17%.
Rails are a very economically sensitive sector. It will be nearly impossible for a real recovery to occur without seeing a sharp rebound in rail data. A study of the 2001 recession shows that rail freight was a fairly good leading indicator of stock market gains. While investors piled back into the market in 2001 when “green shoots” were sprouting rail freight told the real story and remained depressed. Of course, we all know what happened in 2002 when the market got hammered as the economy remained sluggish and hopes of a quick recovery were dashed. Rail freight did not turn positive until about 6 months before the stock market rebound in Q2/Q3 of 2002. Rail freight was an equally good leading indicator heading into the recession of 2008 as freight traffic turned negative in early 2007.
As of now, rail data isn’t just telling us that there is no rebound on the horizon it’s telling us that the green shoots are indeeed weeds and turning more brown by the week.