Rail Traffic Indicates economy is accelerating albeit at a slow pace

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Rail Traffic Indicates economy is accelerating albeit at a slow pace
<a href="https://pixabay.com/users/Fotoworkshop4You/">Fotoworkshop4You</a> / Pixabay

Rail Traffic Indicates economy is accelerating albeit at a slow pace

It’s been awhile since I posted on total N. American rail traffic so I thought I’d update it today with the latest information.  After a middling month of March rail traffic has again begun to accelerate from April through last week coming in at 696k carloads vs 679k the prior year.

As I have said on all these other posts we have to make some adjustments when talking about the absolute numbers and comparing them to previous years. Coal traffic (red line below) collapsed in late 2011 as shale gas became abundant (shipped via pipeline not rail). That has had a roughly 20k per week negative effect on carloads. To give you some scale 20k carloads is about the total amount of food and grain products shipped via rail each week in N. America.

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Capture753 624x381 Rail Traffic Update

Now, some will say shale oil has replaced that. Total weekly coal shipments are still nearly 2X oil shipments (119k to 67k) if not more as the “petroleum” category also includes “chemicals”. Bottom line is the rise in oil shipments via rail has only offset a fraction of coal’s decline. Now, that decline will get smaller as we go forward but for comparison purposes when to look at YOY numbers for total traffic, the only really valid comps we can look at without making adjustments are 2012 and ’13.

Here is the chart, note the two sides are scaled differently

Capture1236 624x385 Rail Traffic Update

So, what do the current numbers tell us? Simply it would seem the economy is accelerating albeit at a slow and methodical pace. Traffic has strengthened for the last 7 weeks with the most recent week’s jump being the largest.

By: valueplays

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Todd Sullivan is a Massachusetts-based value investor and a General Partner in Rand Strategic Partners. He looks for investments he believes are selling for a discount to their intrinsic value given their current situation and future prospects. He holds them until that value is realized or the fundamentals change in a way that no longer support his thesis. His blog features his various ideas and commentary and he updates readers on their progress in a timely fashion. His commentary has been seen in the online versions of the Wall St. Journal, New York Times, CNN Money, Business Week, Crain’s NY, Kiplingers and other publications. He has also appeared on Fox Business News & Fox News and is a RealMoney.com contributor. His commentary on Starbucks during 2008 was recently quoted by its Founder Howard Schultz in his recent book “Onward”. In 2011 he was asked to present an investment idea at Bill Ackman’s “Harbor Investment Conference”.

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