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Showing posts with label AAR. Show all posts
Showing posts with label AAR. Show all posts

Saturday, February 6, 2016

More Tough News for the Rail Roads - Carloads Dropped 16.6%

The January AAR report has come out and it is not pretty for the railroads.  Of course coal has been a big driver but it looks like all commodities are in a decline and that has really hurt the rail. Intermodal is up 3.4% which is "ok" but nothing spectacular.

Bottom line is the economy is just slow and not sure when it will come out of this.  I have not written my "Macroeconomic Monday" report in a long time but I can tell you that the dynamics of this economy are very slow growth, tepid employment and lack of wage growth.  All of this is driving the consumer to save more or pay down debt which limits macro demand.  This is always first seen in the transportation of goods.

More to come... Buckle up for 2016.

Saturday, November 10, 2012

Rail Volume for Week 44 Down - Hurricane Sandy

Association of American Railroads released week 44 on Thursday and as expected volumes were down significantly.  However, anyone who graphs and analyzes this data closely will need to asterisk this week forever as Hurricane Sandy drove most of it.

The data shows a 4.8% decrease in container traffic versus week 44 of 2011.  This can only be explained by the Hurricane and embargo of certain locations.  Container traffic through week 44 increased 5.6% for the year showing the increased volumes will continue and, as expected, trailer traffic on the rails continues its decline in favor of the more efficient COFC.

Overall ton miles are down both for the week and for the year and the driving factor for this is Coal.  Coal is down substantially and while petroleum products are up due to all the shale oil it is not enough, on a ton mile basis, to offset the decrease in coal.

The story continues to unfold despite the blip due to Sandy:

  • COFC is up
  • TOFC is down
  • Overall ton miles are down
  • Coal down
  • Petroleum up dramatically. 

Sunday, October 28, 2012

ATA September Tonnage Report; AAR Rail Loadings

The ATA has issued their September tonnage report and the results are as expected - flat at best (increased.4% after an August decrease of .9%).  The most stunning statement in the report is:
"Compared with September 2011, the SA index was 2.4% higher, the smallest year-over-year increase since December 2009. Year-to-date, compared with the same period last year, tonnage was up 3.6%."
The smallest increase since 2009 is not a good story for the transportation industry.  Combine this with the fact that inventories are somewhat inflated - meaning no real inventory restocking is about to happen - and you realize this year ended very flat for freight and freight movements.  Of course, we have been seeing this all along in our "unofficial" indices which I use to gauge freight demand.  A couple of instructive trends to look at from the graph:
ATA 9/2012 Truck Tonnage Graph

Coming out of the recession you can see the truck tonnage rise but really since the beginning of 2012 it has flattened out substantially.  Further, there is a little blip at the end of 2011 which I believe was essentially a "fear trade".  A "fear trade" was the beginning of the industry pushing hard to put the "fear of God" into shippers telling them if they do not sign up for premium costs then "when the economy turns" the carrier will abandon their freight.   This worked (like all fear trades) for a very short period of time however ultimately rational economics took over and the results are what you see above.

Rail tells a bit of a different story and it is clear the migration from truck to intermodal is occurring at a fast pace.  Market share of intermodal v. truck has to be increasing as I personally believe it has become the preferred mode wherever it can be applied.  It used to be truck was preferred then people would "look at" intermodal and now I believe it is the exact reverse.  Logistics Management magazine said in interviews with shippers at the Council of Supply Chain Management Professionals (CSCMP) Conference - 2012 shippers where now calling intermodal the "go to" mode of freight.

AAR reports while carloads are decreasing in volume, intermodal (IM) is increasing for all major US railroads.  For week 42 (ending October 20, 2012) IM containers were up 6.1% yoy and 5.8% for the cumulative through week 42.  Trailer on Flat Car (TOFC) continues to show significant declines as the migration to containers continues.

Overall we are seeing a very flat freight market and one which shows no real signs of major pick up through the beginning of 2013. If GDP continues to rise at or around 2% and roughly 10% of that number is "non freight" (i.e., financial etc.) then we will see below 2% growth in freight for the foreseeable future.  This is far below the 3% most industry analysts believe is when the real "crunch" will occur.

Unless carriers decide to significantly shrink their business this will mean it will be far more about growing market share than it will be about grabbing more of a growing pie.