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Steady Decline in US Rail Traffic Points to State of US Economy

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US rail traffic

Every Wednesday morning, the AAR (Association of American Railroads) releases the weekly rail traffic data for the previous week. The latest report is for the week ended August 13, 2016.

During this week, US carloads (UNP) fell by 7.1%, at 267,000-plus units from 288,000 units in the week ended August 15, 2015. You can compare this week’s rail data from the previous week in Investor Insights: Freight Rail Traffic, Week Ending August 6.

In the reported week of 2016, the US intermodal volumes also declined by 3.4% to 266,000-plus units, from over 276,000 units during the same period last year. On an overall basis, the US total freight rail traffic in the week ended August 13, 2016, was down by 5.3%.

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Three out of ten carload commodity groups registered volume growth in the week ended August 13, 2016. Grain volumes were up by 27.6%, followed by chemicals, which were up 4.3% and miscellaneous carloads. The declining commodity groups were petroleum and petroleum products (down 25.2%), coal (ARLP) (down 16.4%), and forest products (down 7.5%).

Canadian and Mexican rail traffic

In the latest reported week, Canadian rail traffic (CNI) recorded a decline of 5.7%. Even the Canadian railroads’ intermodal traffic was down by 3.6% in the week ended August 13, 2016. The carloads of Mexican railroads (KSU) recorded a fall of 10.1% in the reported week of 2016. Intermodal traffic was down substantially by 7.3% in the week ended August 13, 2016.

There are 13 railroads that submit the weekly data. These carriers handle about 95% of the total US and Canadian freight traffic. Class I railroads (BRK-B) account for the lion’s share in freight rail movement.

Investors interested in dividends ETFs can opt for the Vanguard Dividend Appreciation ETF (VIG). All US Class I railroads are part of the portfolio holdings of VIG.

For more information on the US’s major railroad stocks, please visit Market Realist’s Railroads page.

In this series, we’ll take a look at all major US railroad’s rail traffic for the week ended August 13, 2016.

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