Total North American rail traffic last week continued to buck its normal seasonal end of year swoon trend. It came in at 684k vs 701k the prior week. The 2% drop is well below the 5%-10% drop we have seen in previous years. The only drop was in intermodal and coal. This again conflicts with the data from last year which saw a drop in almost all categories.
Here is the chart:
Themes for the next decade: Cannabis, 5G, and EVs
A lot changes in 10 years, and many changes are expected by the time 2030 rolls around. Some key themes have already emerged, and we expect them to continue to impact investing decisions. At the recent Morningstar conference, several panelists joined a discussion about several major themes for the next decade, including cannabis, 5G and Read More
Now, many have speculated that the resilience in rail traffic is due to an increase in petroleum shipments. Too be sure, petroleum shipments via rail are up both YOY and over the past few years but they do not offset the loss in coal shipments due to the switch from coal to gas in electric utilities (a 15k fall in coal vs a 10k rise in chem/petrol last week, coal on left axis). This means the strength is coming from other categories.
Here is the chat of coal vs chemical/petroleum. Note that petroleum and chemicals are grouped together so the rise there is not all petroleum.
Others have speculated that the drought on the Mississippi has caused more grain traffic to be transported by rail than river barge. While that may be happening on a small scale, YOY grain traffic via rail has barely budged up (1%) so we can eliminate that as a factor.
Given that, I continue to feel that the rail traffic numbers we are seeing is due to continued economic strength in the general economy. We should be seeing traffic fall several times the amount it has been. That is hasn’t and we are seeing strength across every shipping category is very encouraging.
Once the “fiscal cliff” drama is passed, people will begin to notice what is going on out there.