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September freight numbers roll in

on Tuesday, October 09, 2012

The Association of American Railroads’ Rail Time Indicators August reporting period includes five weeks and September only four. That means total car loadings on categories that were rising will appear to have stopped in their tracks, or risen only slowly.

So it’s with a heavy heart that I advise you to take monthly totals — which are better indicators of the overall economy and demand for product moves and trends — with a grain of salt. This time we’ll rely more on the weekly average moves, which tell us about how railroads work with given operating conditions and demand.

Canadian trash talk

According to Rail Time Indicators, total September moves of “waste & nonferrous scrap” were up on Canadian Pacific and Canadian National railroads to a combined 3,764. This was a 64 percent increase from the same period in 2011 and a 71 percent increase from 2010. This is down from a total 4,229 loads in August, but even the August figure was up 65 percent from 2011.

U.S.-based moves of construction debris, ashes, and paper waste, by comparison, were in free fall. Total moves on U.S. Class I railroads were 15,016 in August and just 11,805 in September. These were 15 and 13 percent declines, respectively, from the same periods in 2011.

There would be average weekly moves here for trash, but AAR lumps those small quantity moves in with “all commodities” for charting.

For railfans: This kind of waste on railroads is typically heavy, and there are usually only a handful of high-volume sources for it. The numbers alone don’t show if this is recyclable aluminum scrap, paper fibers, or just plain ole concrete chunks. The only thing we know with these numbers is that more waste is moving over CP and CN, and much less on U.S.-based railroads. Eagle-eyed railfans will be able to report back if they see new projects along CP or CN routes and connecting short lines, or if the Canadian railroads appear to have taken business from a U.S. line.

Coal, oil, and gas

Keeping the four weeks of September in mind, coal loadings were also in free fall in September on U.S. railroads, topping out at just 478,605. That was down 22 percent from August — following seasonal ups and downs, but also down 12 percent from 2011 and 11 percent from 2010.

Charts that AAR provides in Rail Time Indicators show that average weekly moves after the October reporting period tend to flatten and decrease. The chart this year appears to follow the same pattern.

For contrast, combined U.S. and Canadian “petroleum & petroleum products” moves, which were up year over year in August by 44 percent, were up again — by 46 percent from the same period in 2011.

Total September moves were down 18 percent from August to 70,823 loadings, but the weekly average ticked up to almost 18,000. If September had five reporting weeks, the total would likely have been higher as well.

For railfans: That both the monthly total and the average weekly coal loadings are both down flag that photo ops with unit coal trains will be much less common. And, barring some unforeseen event, coal moves are going to continue dropping while oil moves steadily climb upward — but not even close to matching the volume. That’s just the way it is.

The silver lining here, if there is one, is on page 9 in the monthly report, in the chart covering electricity production from natural gas. As natural gas feeds electric plants, look for railroads to deliver more frac sand; clean water; and mixed loads of pipe, equipment, and fuel in out-of-the-way places. Look for hillsides and towns without “blinker lights” at intersections where 18-wheelers have a difficult time moving, but shale gas drilling projects are plentiful. I will be placing bets close to home for increases in rail deliveries to northwestern Pennsylvania and that move southward as the ground freezes, making heavy equipment possible to move in fields.

Wood is flat

Last month, combined percentage changes of U.S. and Canadian carloads of everything from pulpwood to lumber and pulp and paper looked good. In September, total carloads were down 24 percent to 71,535. Weekly average loadings were also down to around 18,000 from about 18,500 — taking in all of AAR’s data for the categories.

For railfans: Although it doesn’t look great on paper, as long as the average weekly loadings are up or steady expect wood and wood products to keep moving from rural short lines to lumber yards and plywood stacks along Class I main lines now through the winter.

APB on grain exports

From watching the U.S. Farm Report, I learned in late September that China made big buys in the U.S. corn, soybean, and wheat markets. Although Chinese traders have the same right to speculate as anyone else, expect Chinese buyers to take delivery of their purchases. Rail Time Indicators’ charts show that weekly grain-car loadings for both U.S. and Canadian railroads pop after harvest in September and October. With this year’s early harvest (what little there was) throughout much of the Midwest and Great Plains, expect grain trains to be moving to Pacific ports sooner rather than later.

Intermodal, briefly

With all reporting railroads combined, trailers were down 21 percent from August to 123,459 loadings, while container TEUs (20-foot equivalent units) dropped 20 percent to just more than 1 million moves. The U.S. weekly average loadings ticked down, while Canadian railroads’ intermodal loading average ticked up. In short, Canadian railroads are moving more containers than ever, while U.S. loadings are steadily growing, but not like their Canadian counterparts. Proof of how good this year will be will come with the October report, which should cover most of North America’s timed-for-Christmas shopping imports.

For more details, you can read AAR’s full Rail Time Indicators report.

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