Rail Traffic Hits Record Level

Rail Traffic Hits Record Level

Total N. American rail traffic last week leaped to the highest levels in the 5 years I began tracking the series here. At 733k carloads it passed the previous highs despite both oil/chemical shipments and coal shipments falling slightly. Strength was seen in intermodal, auto, metals and stone products. The metal and stone product categories sit at or just below multi year record levels. Think retailers beginning to stock shelves for xmas season and construction beginning to pick up when absorbing the increases. As for the carriers, Burlington Northern Santa Fe, LLC (NYSE:BNI) and Canadian National Railway (NYSE:CNI) saw their traffic also reach the highest level since I began tracking the series.

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This is an extremely encouraging rail report. Now, the one caution I would urge is that this is the first reporting week post Labor Day so we always see a rebound in traffic. BUT, the size and degree of the rebound is not something we have seen in the last several years. It will bear watching this week to see if this is just pull forward or something else. Now, typically rail traffic will rise slightly or flatten over the next 3-4 weeks and then begin a gradual decline through the end of the year. That is the historic pattern so anything that happens will be measured against that pattern.

Here is the chart:

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Rail Traffic

Here is the coal/oil ($USO) ($KOL)comp chart:
Capture1252 624x417 Rail Traffic Reaches Record Level

If we go back both YOY and to the previous high overall level, we’ll find that the oil/coal combination is essentially flat so that tells us even more affirmatively that the rail traffic growth is organic growth in the US economy, not some structural energy shift that is goosing #’s.

Via: valueplays.net

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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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