Tag Archives: Rail traffic

Rail Freight Gets Clocked from all Sides in this Economy, by Wolf Richter

Posted on October 12, 2016 | 1 comment

The real economy continues to deteriorate, with no let up in the transportation sector. From Wolf Richter at wolfstreet.com:

This hasn’t happened since the Financial Crisis.

Total US freight rail traffic, as measured in carloads and intermodal units, fell 6.1% in the week ended October 8, from the same week last year, the Association of American Railroads reported today. It was down 10% from the same week two years ago!

Both of its components were down: Carloads – transporting oil, coal, grains, chemicals, and the like – fell 5.9% in the week, to 264,165 loads. Intermodal (containers and trailers), which accounts for about 46% of total traffic, fell 6.4% from a year ago, and 6.5% from two years ago.

This comes after an already dreary September, when total freight traffic was down 4.8% from September last year, with carloads down 5.4% , and intermodal down 4.2%.

“Rail traffic in September was more of what we have come to expect this year: big declines in energy related products, continued weakness in intermodal and most other export markets, but with some strength in grain,” the AAR report said. “The fact is, in many of their markets, railroads are facing significant market uncertainties.”

These “significant market uncertainties” – actually “certainties” would be a better word – come in several packages:

The decline in car loads is mostly due to two big factors:

1. The ongoing collapse of coal shipments. Power generators have been switching to natural gas and renewables, at the expense of coal. This trend started years ago when the price of natural gas collapsed and when power generators began building large utility-scale renewables facilities, particularly wind, in Texas, California, and other states.

2. The total collapse of crude oil shipments. This started two years ago, when the oil bust began to bite. In the latest week, shipments of petroleum and petroleum products were down nearly 70% from the same week two years ago!
A more recent addition to the freight rail problem is the decline in intermodal traffic.

Intermodal had been the big hope for railroads. As oil and coal shipments were collapsing, intermodal was growing, and the hope was that it would be able to compensate for the decline in coal and oil shipments. But that hope fell apart in Q4 2015, when intermodal booked its first year-over-year decline (-9%) since the Financial Crisis.

This was followed by an uptick (+1%) in Q1 and by two back-to-back year-over-year declines in Q2 and Q3 (about 5% each).

It’s not just a blip. Year-to-date, US railroads reported a total volume decline of 6.9% from the same period last year, with car loads down 10.4% and intermodal units down 3.3%. Coal shipments, by far the largest category, accounting for about 30% of total carloads, plunged 25%. Petroleum and petroleum products shipments fell 22%, forest products 7.8%….

The only bright spots in terms of carloads, year-to-date: grains (+5.6%), motor vehicles (+2.7%), chemicals (+1.7%), and “other,” the smallest category (+16.7%).

But one of these bright spots, motor vehicles, which accounts for over 7% of total carloads, is turning into the next brake shoe to drop.

To continue reading: Rail Freight Gets Clocked from all Sides in this Economy

 

1 Comment

Posted in Business, Economy

Tagged ,

What Rail Freight Volume just Said about China, by Wolf Richter

Posted on August 30, 2016 | Leave a comment

The Chinese economy is slowing down, although their economic statistics are so unreliable that it’s impossible to say how much. From Wolf Richter at wolfstreet.com:

Mandating top-down economic growth is not enough.

The Chinese government is getting nervous about the numbers and is insisting, top-down, on obtaining economic growth of 6.5% to 7% this year, one way or the other.

China’s cabinet has sent inspectors fanning out to provinces across the country to “keep economic growth within a reasonable range and ensure the main objectives and tasks of this year’s economic and social development will be completed,” according to Xinhua news agency, cited by Reuters. Because, apparently not all of China was playing along….

Some regions and government departments are not coordinating their policies well and some officials are lazy in their work, Xinhua said.

These inspectors, in addition to keeping up the pressure on growth, are also supposed to make sure that major policy measures are implemented along with “supply-side structural reforms” – cutting, for example, the massive and destructive overcapacity in the steel and coal sectors and the power generation sector. And these inspectors also supposed to support investment projects and innovations.

The government must have taking a good look at the rail freight data and is getting desperate, and it’s going to force official growth to happen, because the rail freight data, one of the key gauges of the goods producing economy, is dismal and contradicts the official growth story.

The National Development and Reform Commission (NDRC) said Monday that rail freight volume in July dropped 5.8% from a year ago, to 263 million tons of cargo. For the first seven months, rail freight volume plunged 7.3% year-over-year.

But 2015 was already a terrible year.

Volume of rail freight traffic, as measured by metric tons of cargo transported and the distance traveled in kilometers, had plunged 13.4% from 2014, to 2.38 trillion ton-kilometers, according to Statista. And in 2014, rail freight volume had fallen 5.8% from 2013:

Note how freight volume plateaued in 2011, 2012, and 2013 before entering the decline phase. With 2015 freight volume down nearly to the level of 2007, freight volume for 2016 is shaping up to be considerably lower still – and has a chance of setting a decade low.

That doesn’t speak of growth in the goods-producing sector, or even of stagnation. That speaks of an ongoing sharp multi-year decline with hues of depression in certain areas of the goods-producing economy.

While some areas of the goods-producing economy are still growing, such as the production of autos and automotive components, with heavily incentivized auto sales likely to hit another record this year, other areas are in a steep decline, exports are weak, the construction sector is wobbling….

These losses in the goods-producing economy are now to be overcome by gains in the service sector as part of the great transition, and the service sector is growing, but it’s going to have to hustle to get even close. So maybe it’s just easier for all these local officials who submit economic growth numbers to the central government to do a little fudging.

And manufacturing has another challenge: the Great Equalizer has arrived. Read… Why China’s Multi-Decade Manufacturing Miracle is Over

http://wolfstreet.com/2016/08/30/what-rail-freight-volume-just-said-about-china/

Leave a comment

Posted in Economy, Government, Uncategorized

Tagged , ,

Rail Traffic Depression: 292 Union Pacific Engines Are Sitting In The Arizona Desert Doing Nothing, by

Posted on May 11, 2016 | Leave a comment

If you go look out in the real economy, as opposed to the Wall Street and Washington fantasy economy, you’ll swear you see a recession. from Michael Snyder at theeconomiccollapse.blog:

We continue to get more evidence that the U.S. economy has entered a major downturn. Just last week, I wrote about how U.S. GDP growth numbers have been declining for three quarters in a row, and previously I wrote about how corporate defaults have surged to their highest level since the last financial crisis. Well, now we are getting some very depressing numbers from the rail industry. As you will see below, U.S. rail traffic was down more than 11 percent from a year ago in April. That is an absolutely catastrophic number, and the U.S. rail industry is feeling an enormous amount of pain right now. This also tells us that “the real economy” is really slowing down, because less stuff is being shipped by rail all over the nation.

One of the economic commentators that I have really come to respect is Wolf Richter of WolfStreet.com. He has a really sharp eye for what is really going on in the economy and in the financial world, and I find myself quoting him more and more as time goes by. If you have not checked out his site yet, I very much encourage you to do so.

On Wednesday, he posted a very alarming article about what is happening to our rail industry. The kinds of numbers that we have been seeing recently are the kinds of numbers that we would expect if an economic depression was starting. The following is an excerpt from that article…

Total US rail traffic in April plunged 11.8% from a year ago, the Association of American Railroads reported today. Carloads of bulk commodities such as coal, oil, grains, and chemicals plummeted 16.1% to 944,339 units.

The coal industry is in a horrible condition and cannot compete with US natural gas at current prices. Coal-fired power plants are being retired. Demand for steam coal is plunging. Major US coal miners – even the largest one – are now bankrupt. So in April, carloads of coal plummeted 40% from the already beaten-down levels a year ago.

Because rail traffic is down so dramatically, many operators have large numbers of engines that are just sitting around collecting dust. In his article, Wolf Richter shared photographs from Google Earth that show some of the 292 Union Pacific engines that are sitting in the middle of the Arizona desert doing absolutely nothing. The following is one of those photographs…

As Wolf Richter pointed out, it costs a lot of money for these engines to just sit there doing nothing…

These engines are expensive pieces of equipment. When they just sit there, not pulling trains, they become “overcapacity,” and they get very expensive. Then there are engineers and other personnel who suddenly become unproductive. Some of them have already been laid off or are getting laid off.

All over the world, similar numbers are coming in. For example, the Baltic Dry Index fell 30 more points on Wednesday after falling 21 on Tuesday. Global trade is really, really slowing down during the early portion of 2016. What this means on a practical level is that a lot less stuff is being bought, sold and shipped around the planet.

To continue reading: Rail Traffic Depression: 292 Union Pacific Engines Are Sitting In The Arizona Desert Doing Nothing

Leave a comment

Posted in Business, Economy, Uncategorized

Tagged , ,