Rail Time Indicators A Review of Key Economic Trends Shaping Demand for Rail Transportation

Transcription

1 Rail Time Indicators A Review of Key Economic Trends Shaping Demand for Rail Transportation Policy & Economics Department Association of American Railroads Washington, D.C. May 4,

2 Rail Time Indicators is issued monthly by the Policy and Economics Department of the Association of American Railroads. It is free of charge. To get on the distribution list for Rail Time Indicators, send a request including your name and business affiliation, if any, to Beth Eagney at beagney@aar.org. If you have questions or comments about the content of Rail Time Indicators, please contact Dan Keen (dkeen@aar.org, ) or Shannon Stare (sstare@aar.org, ). Copyright by the Association of American Railroads. Reproduction or retransmittal of Rail Time Indicators within a company for internal use is allowed, as is reasonable redistribution outside a company (for example, passing it on to someone you think might be interested in it). Unless approved by the AAR, reproduction or retransmittal for commercial use is prohibited except for short excerpts or quotations. Uploading of Rail Time Indicators to a public web site is prohibited unless approved by the AAR. All media inquiries should be directed to Holly Arthur (harthur@aar.org, ). The last six editions of Rail Time Indicators are available on the AAR web site here. Rail traffic data in Rail Time Indicators are sometimes presented on a seasonally adjusted basis and sometimes on a non-seasonally adjusted basis. Because of the nature of the AAR s weekly rail traffic data and the nature of rail traffic (e.g., daily data are not available; some months have four weeks of data and some have five; holidays may be in one rail traffic month one year and in a different month the next; rail traffic varies by the day of the week; some commodity categories can exhibit wide swings in carloads from month to month for reasons unrelated to seasonal variations; the weather can have significant effects on traffic), the seasonal-adjustment process for rail traffic is not completely precise. Seasonally adjusted rail traffic data should be considered a complement to, rather than a replacement for, unadjusted rail traffic data. Information in Rail Time Indicators is obtained from sources believed to be reliable. However, the Association of American Railroads makes no representations as to the accuracy or completeness of such information and assumes no liability for errors or omissions.

3 SUMMARY OF MOST RECENT DATA Economic Indicator U.S. Freight Rail Traffic (p. 2) Canadian Freight Rail Traffic (p. 4) Gross Domestic Product (p. 17) Purchasing Managers Index (p. 19) Non-Manufact. Index (p. 19) Manufacturing Inventories and Sales (p. 21) Industrial Production (p. 22) Capacity Utilization (p. 24) Employment and Unemployment Rate (p. 26) Railroad Employment (p. 28) Most Recent Data Not Seasonally Adjusted: Total carloads 5. (mainly due to another big decline in coal carloads); carloads excluding coal 3.2%; and intermodal 3.6% in April compared with April. Seasonally Adjusted: Carloads in April 2. from March ; intermodal in April 0.3% over March. Not Seasonally Adjusted: Carloads in April 3.1% over April ; intermodal in April 10.7% over April. Best month ever for intermodal for Canadian railroads. Seasonally Adjusted: Carloads in April 1.1% over March ; intermodal in April 1.3% over March. 2.2% in Q1, according to the first preliminary estimate released on April 27. Was 3. in Q4. to 54.8 in April from 53.4 in March ; highest since June. New orders to 58.2 in April from 54.5 in March. to 53.5 in April from 56.0 in March. Second straight decline. Manufacturing sales 0.7%, manufacturing inventories 0.3%, and inventory-sales ratio 0.4% in March compared with Feb.. Overall industrial output was flat in March for the second straight month. Manufacturing output 0.2% in March from Feb.. to 78.6% in March from 78.7% in February. Manufacturing to 78.3% in March from 78.6% in February. 115,000 net new jobs created in April, down from 154,000 in March. Unemployment rate to 8.1% in April from 8.2% in March. 1,295 in March from Feb. to 160,523 employees, highest since Dec Big increase in maintenance of way employees. Consumer Confidence (p. 29) to 69.2 in April from 70.2 in March. Retail Sales (p. 30) Light Vehicle Sales (p. 31) 0.8% ($3.2 billion) in March over February, down from 1. increase in Feb. but still third-highest monthly gain in past year. to 14.4 million (annualized) in April, up from 14.3 million in March. Housing Starts (p. 33) to 654,000 annualized in March from 694,000 in February. Fallen for two straight months for first time since Oct-Nov.. Consumer Price Index (p. 34) Rail Freight Cars in Storage (p. 35) 0.3% in March over February ; 2.7% for the year ending March. to 307,957 on May 1, (20.1% of the fleet), up 8,633 cars from April 1,. `Rail Time Indicators May 4, Page 1 of 36

4 U.S. AND CANADIAN FREIGHT RAILROAD TRAFFIC What is it and why is it important? The Association of American Railroads (AAR) releases its Weekly Railroad Traffic report every Thursday morning. The report contains rail traffic data for the previous week. Weekly data are aggregated into monthly totals in Rail Time Indicators. Railroads reporting to the AAR collectively handle about 9 of total U.S. and Canadian freight rail traffic. AAR rail traffic data are reported as carloads or as intermodal units. Carload traffic is classified into one of 20 different commodity categories and is carried in a variety of rail car types (e.g., tank cars, covered hoppers, gondolas, boxcars, etc.). A unit of rail intermodal traffic is either a shipping container (currently about 87% of U.S. rail intermodal traffic) or a truck trailer (about 1) carried on a railroad flat car. Intermodal is not included in carload figures. Commodity detail on the freight inside the container or trailer is not available. Freight railroading is a derived demand industry: demand for rail service occurs as a result of demand elsewhere in the economy for the products railroads haul. Thus, rail traffic is a useful gauge of broader economic activity, especially of the tangible economy. What are the latest numbers for U.S. railroads? U.S. railroads originated a total of 1,113,105 carloads in April, down 5. (64,335 carloads) from the same period in. Total carloads averaged 278,276 per week in April, down from 294,360 in April. Year-over-year carloads have now fallen for three consecutive months (see chart below right). Average Weekly U.S. Rail Carloads: All Commodities (not seasonally adjusted) 360, , , , , , , (peak year) Data are weekly average originations for each month, exclude the U.S. operations of CN and CP, and reflect revisions to original reporting. Source: AAR Weekly Railroad Traffic % Change in Total U.S. Rail Carloads From Same Month Previous Year: Jan April April was down 5. from April and down 5.6% from April Data are based on originations, are not seasonally adjusted, exclude U.S. operations of CN and CP, and reflect revisions to original reporting. Source: AAR Weekly Railroad Traffic U.S. intermodal traffic containers and trailers on railroad flat cars was up 3.6% (32,505 units) in April over April to 946,951 units, its 29 th straight year-over-year monthly increase. The average in April was 236,738 intermodal units per week, the second highest average of any April in history (just behind April 2006 s 237,062) and the 13 th highest of any month in history. (Most of the top months are in the fall, when intermodal tends to peak.) Once again, coal was the main reason for the decline in total carloads. Coal carloads were down 16.6% (85,719 carloads) in April, their biggest year-over-year percentage decline on record. A warm winter, low natural gas prices that make gas-based electricity generation more competitive vis-à-vis coal-based generation, and environmental pressures are all reducing U.S. coal consumption, and thus rail coal carloads. See page 8 for more on coal. Meanwhile, U.S. rail grain carloads were down 17.2% (16,402 carloads) in April from April, their 10 th straight significant decline. Grain carloads are hurting largely because U.S. grain exports are down. See page 10 for more on grain. `Rail Time Indicators May 4, Page 2 of 36

5 260, , , , , , , , , ,000 Average Weekly U.S. Rail Intermodal Traffic (not seasonally adjusted) 2006 (peak year) Data are weekly average originations for each month, exclude U.S. operations of CN and CP, and reflect revisions to original reporting. Source: AAR Weekly Railroad Traffic % Change in U.S. Rail Intermodal Traffic From Same Month Previous Year: Jan April April was up 3.6% over April and up 12.9% over April Data are based on originations, are not seasonally adjusted, exclude U.S. operations of CN and CP, and reflect revisions to original reporting. Source: AAR Weekly Railroad Traffic Again this month, rail traffic is more encouraging if you forget about coal and grain. Excluding coal, U.S. rail carloads were up 3.2% (21,384 carloads) in April over April (see the charts in the middle row of page 11). Excluding coal and grain, the increase in April was 6.7% (37,786 carloads see the charts on the bottom of page 11). Commodities with gains on U.S. railroads in April included petroleum and petroleum products (up 11,376 carloads, or an astounding 43.1% see the charts in the middle of page 13) 1 ; motor vehicle and parts (up 11,360 carloads, or 21.1% bottom of page 13); crushed stone, gravel, and sand (up 6,617 carloads, or 9.3% top of page 13); steel and other primary metal products (up 3,297 carloads, or 8.1% middle of page 12); and stone, clay, and glass products 2 (up 2,975 carloads, or 10.). Carloads of the aggregation industrial products were up 7.3% in April over April (top of page 12). In addition to coal and grain, commodities with carload declines in April on U.S. railroads included iron and steel scrap (down 1,067 carloads, or 5.3% see bottom of page 12) and farm products excluding grain (down 448 carloads, or 12.9%). 11 of the 20 commodity categories tracked by the AAR saw carload gains in April compared with April. The table on page 5 has more commodity detail for U.S. railroads. Seasonally adjusted total U.S. rail carloads were down 2. in April from March, their fourth straight monthly decline. Seasonally adjusted rail carloads excluding coal and grain were up 0.7% for the month. Seasonally adjusted U.S. rail intermodal traffic was up 0.3% in April over March (see the charts on page 15). # of AAR Commodity Categories* With Year-Over-Year Gains For U.S. Railroads Month Jan Feb Mar Apr May 19 8 Jun Jul Aug Sep Oct Nov Dec U.S. rail carloads were down 3.2% (159,977 carloads) in *Out of 20. Source: AAR the first four months of compared with the same period in, thanks mainly to coal (down 11.3% YTD, or 253,912 carloads) and grain (down 12.1%, or 48,598 carloads). Excluding coal and grain, YTD carloads were up 6.2% (142,533 carloads). YTD intermodal volume was up 2.8% (104,677 units). 1 The May edition of Trains magazine ( has an informative piece by Fred Frailey on oil trains in North Dakota. 2 Approximately 7 of this category consists of ground earths and minerals (for example, kaolin and other clay products, roofing granules, agricultural limestone, and crushed slag) and cement. For details on the makeup of the 20 major carload traffic categories tracked by the AAR in Rail Time Indicators, send an to dkeen@aar.org. `Rail Time Indicators May 4, Page 3 of 36

6 What are the latest numbers for Canadian railroads? Canadian railroads (including their U.S. operations) originated 319,458 carloads in April, an average of 79,865 carloads per week and up 3.1% (9,465 carloads) over April. Canadian intermodal volume in April was 211,269 containers and trailers, an average of 52,817 per week, up 10.7% over April and the highest weekly average for any month in history for Canadian railroads. YTD Canadian carloads were up 4.8% (60,171 carloads); YTD Canadian intermodal volume was up 7.9% (61,490 units). 11 of the 20 carload commodity categories tracked by the AAR saw increases on Canadian railroads in April. As was the case with U.S. railroads, petroleum and petroleum products led the way (up 6,504 carloads, or 42.2%). North Dakota is the source of many of the petroleum carloads for Canadian # of AAR Commodity Categories* With Year-Over-Year Gains For Canadian Railroads Month Jan Feb Mar Apr May 16 9 Jun Jul Aug Sep Oct Nov Dec *Out of 20. Source: AAR railroads, as it is for U.S. railroads. Other commodities with increases in April included metallic ores (up 2,897 carloads, or 5.) and crushed stone, sand, and gravel (up 1,923 carloads, or 26.8%). The table on page 6 has commodity detail for Canadian railroads in April. Seasonally adjusted Canadian rail carloads in April were up 1.1% over March, while seasonally adjusted intermodal volume in April was up 1.3% over March (see the charts on the bottom of page 15). Avg. Weekly Canadian Rail Carloads: All Commodities (not seasonally adjusted) 90,000 85,000 80,000 75,000 70,000 65,000 60,000 55,000 50, (peak year) Data are weekly average originations for each month, include CN and CP (including their U.S. operations), and reflect revisions to original reporting. Source: AAR Weekly Railroad Traffic % Change in Total Canadian Rail Carloads From Same Month Previous Year: Jan April April was up 3.1% over April and up 6.8% over April Data are based on originations, are not seasonally adjusted, include CN and CP (including their U.S. operations), and reflect revisions to original reporting. Source: AAR Weekly Railroad Traffic Average Weekly Canadian Rail Intermodal Traffic (not seasonally adjusted) 54,000 50,000 46,000 42,000 38,000 34,000 (peak year) 2008 Data are based on originations, include CN and CP (including their U.S. operations), and reflect revisions to original reporting. Source: AAR Weekly Railroad Traffic % Change in Total Canadian Intermodal Traffic From Same Month Previous Year: Jan April April was up 10.7% over April and up % over April Data are based on originations, are not seasonally adjusted, include CN and CP (including their U.S. operations), and reflect revisions to original reporting. Source: AAR Weekly Railroad Traffic `Rail Time Indicators May 4, Page 4 of 36

7 U.S. RAIL TRAFFIC: APRIL * (4 weeks ending April 28, ) Difference % Change Commodity Apr Apr Apr '12-'11 '12-'10 '12-'11 '12-'10 Agricultural & food products 145, , ,699-16,406-6, % -4.1% Grain 78,831 95,233 83,824-16,402-4, % -6. Farm products excl. grain 3,034 3,482 3, % -10.7% Grain mill products (1) 38,202 37,401 39, , % -2.7% Food products 25,390 25,747 25, % 0.7% Chemicals and petroleum 160, , ,598 12,568 15, % Chemicals 122, , ,439 1,192 3, % Petroleum & petr. products (2) 37,778 26,402 25,159 11,376 12, % 50.2% Coal 429, , ,280-85, , % -19. Forest products 42,204 40,678 41,736 1, % 1.1% Primary forest products (3) 6,158 5,330 7, , % Lumber & wood products 12,941 12,020 12, % 6. Pulp & paper products 23,105 23,328 22, % Metallic ores and metals 109, ,463 99,973 3,611 9, % 9.1% Metallic ores (4) 32,462 30,791 25,786 1,671 6, % 25.9% Coke 13,432 13,722 13, % -3.1% Primary metal products (5) 44,151 40,854 38,562 3,297 5, % 14. Iron & steel scrap 19,029 20,096 21,759-1,067-2, % -12. Motor vehicles & parts 65,267 53,907 49,176 11,360 16, % 32.7% Nonmetallic minerals & prod. 130, , ,281 9,785 2, % 2.2% Crushed stone, gravel, sand 78,022 71,405 75,653 6,617 2, % 3.1% Nonmetallic minerals (6) 20,643 20,450 21, , % -4.7% Stone, clay & glass prod. (7) 31,438 28,463 29,965 2,975 1, % Other 31,065 32,125 34,357-1,060-3, % -9.6% Waste & nonferrous scrap (8) 12,720 12,890 15, , % -15.4% All other carloads 18,345 19,235 19, % -5.1% TOTAL ALL CARLOADS 1,113,105 1,177,440 1,179,100-64,335-65, % Trailers 117, , ,970-13,484-6, % -4.9% Containers 829, , ,812 45, , % 16. TOTAL ALL INTERMODAL 946, , ,782 32, , % 12.9% (1) - flour, animal feed, corn syrup, corn starch, soybean meal, DDGs, etc. (5) - primarily iron & steel; some aluminum, copper, etc. (2) - crude petroleum and all products of petroleum refining (6) - phosphate rock, rock salt, crude sulphur, clay, etc. (liquefied gases, asphalt, fuel oil, lubricating oil, jet fuel, etc.) (7) - cement, ground earths or minerals, gypsum, etc. (3) - wood raw materials such as pulpwood and wood chips (8) - scrap paper, construction debris, ashes, etc. (4) - overwhelmingly iron ore, but some aluminum ore, copper ore, etc. *Data are originations not seasonally adjusted. Includes BNSF, CSX, KCS, NS, UP, Birmingham Southern, Florida East Coast, Lake Superior & Ishpeming, and Paducah & Louisville. Excludes CN's and CP's U.S. operations. Source: AAR Weekly Railroad Traffic 625, , , , , , , , ,000 Average Weekly U.S. Rail Traffic: Total Carloads + Intermodal Units 2006 (peak year) 400,000 Data are weekly average originations for each month, are not seasonally adjusted, exclude U.S. operations of CN and CP, and reflect revisions to original reporting. Source: AAR % Change in U.S. Rail Carloads + Intermodal Units From Same Month Prev. Year: Jan April April was down 1. from April and up 2.1% over April Data are based on originations, are not seasonally adjusted, exclude U.S. operations of CN and CP, and reflect revisions to original reporting. Source: AAR Weekly Railroad Traffic `Rail Time Indicators May 4, Page 5 of 36

8 CANADIAN RAIL TRAFFIC: APRIL * (4 weeks ending April 28, ) Difference % Change Commodity Apr Apr Apr '12-'11 '12-'10 '12-'11 '12-'10 Agricultural & food products 62,673 64,752 67,867-2,079-5, % -7.7% Grain 36,231 37,270 41,007-1,039-4, % -11.6% Farm products excl. grain 11,614 11,648 11, % -0.6% Grain mill products (1) 5,814 6,750 6, , % -16.1% Food products 9,014 9,084 8, % 9.3% Chemicals and petroleum 68,885 62,041 59,578 6,844 9, % Chemicals 46,958 46,618 44, , % 6.4% Petroleum & petr. products (2) 21,927 15,423 15,460 6,504 6, % 41.8% Coal 33,308 35,973 33,376-2, % -0.2% Forest products 31,698 32,845 29,552-1,147 2, % Primary forest products (3) 6,722 6,685 6, % 9.4% Lumber & wood products 11,289 10,972 9, , % 15.4% Pulp & paper products 13,687 15,188 13,626-1, % 0.4% Metallic ores and metals 72,274 67,891 60,625 4,383 11, % Metallic ores (4) 55,942 53,045 45,930 2,897 10, % Coke 3,048 1,589 1,885 1,459 1, % 61.7% Primary metal products (5) 9,379 9,774 9, % Iron & steel scrap 3,905 3,483 3, % 5.2% Motor vehicles & parts 23,554 21,677 21,544 1,877 2, % 9.3% Nonmetallic minerals & prod. 21,704 19,623 20,652 2,081 1, % 5.1% Crushed stone, gravel, sand 9,110 7,187 8,244 1, % 10. Nonmetallic minerals (6) 6,465 7,591 6,953-1, % -7. Stone, clay & glass prod. (7) 6,129 4,845 5,455 1, % Other 5,362 5,191 5, % -7. Waste & nonferrous scrap (8) 1,624 1,268 1, % 19.7% All other carloads 3,738 3,923 4, % -15.8% TOTAL ALL CARLOADS 319, , ,989 9,465 20, % 6.8% Trailers 6,100 6,425 6, % -10.6% Containers 205, , ,778 20,689 27, % 15.4% TOTAL ALL INTERMODAL 211, , ,599 20,364 26, % 14.4% (1) - flour, animal feed, corn syrup, corn starch, soybean meal, DDGs, etc. (5) - primarily iron & steel; some aluminum, copper, etc. (2) - crude petroleum and all products of petroleum refining (6) - phosphate rock, rock salt, crude sulphur, clay, etc. (liquefied gases, asphalt, fuel oil, lubricating oil, jet fuel, etc.) (7) - cement, ground earths or minerals, gypsum, etc. (3) - wood raw materials such as pulpwood and wood chips (8) - scrap paper, construction debris, ashes, etc. (4) - overwhelmingly iron ore, but some aluminum ore, copper ore, etc. *CN and CP, including their U.S. operations. Data are originations not seasonally adjusted. Source: AAR Weekly Railroad Traffic 140, , , , ,000 90,000 Average Weekly Canadian Rail Traffic: Total Carloads + Intermodal Units 2007 (peak year) Data are weekly average originations for each month, are not seasonally adjusted, include CN and CP (including their U.S. operations), and reflect revisions to original reporting. Source: AAR % Change in Canadian Carloads + Intermodal Units From Same Month Prev. Year: Jan April April was up 6. over April and up 9.7% over April Data are based on originations, are not seasonally adjusted, include CN and CP (including their U.S. operations), and reflect revisions to original reporting. Source: AAR Weekly Railroad Traffic `Rail Time Indicators May 4, Page 6 of 36

9 COMBINED U.S. AND CANADIAN RAIL TRAFFIC: APRIL * (4 weeks ending April 28, ) Difference % Change Commodity Apr Apr Apr '12-'11 '12-'10 '12-'11 '12-'10 Agricultural & food products 208, , ,566-18,485-11, % -5.2% Grain 115, , ,831-17,441-9, % -7.8% Farm products excl. grain 14,648 15,130 15, % -2.8% Grain mill products (1) 44,016 44,151 46, , % -4.7% Food products 34,404 34,831 33, % 2.8% Chemicals and petroleum 229, , ,176 19,412 25, % 12.3% Chemicals 169, , ,557 1,532 6, % 3.7% Petroleum & petr. products (2) 59,705 41,825 40,619 17,880 19, % 47. Coal 462, , ,656-88, , % Forest products 73,902 73,523 71, , % Primary forest products (3) 12,880 12,015 13, % -3.8% Lumber & wood products 24,230 22,992 21,934 1,238 2, % 10. Pulp & paper products 36,792 38,516 35,972-1, % Metallic ores and metals 181, , ,598 7,994 20, % 12.9% Metallic ores (4) 88,404 83,836 71,716 4,568 16, % 23.3% Coke 16,480 15,311 15,751 1, % 4.6% Primary metal products (5) 53,530 50,628 47,661 2,902 5, % 12.3% Iron & steel scrap 22,934 23,579 25, , % -10. Motor vehicles & parts 88,821 75,584 70,720 13,237 18, % Nonmetallic minerals & prod. 151, , ,933 11,866 3, % Crushed stone, gravel, sand 87,132 78,592 83,897 8,540 3, % 3.9% Nonmetallic minerals (6) 27,108 28,041 28, , % -5.3% Stone, clay & glass prod. (7) 37,567 33,308 35,420 4,259 2, % 6.1% Other 36,427 37,316 40, , % -9.3% Waste & nonferrous scrap (8) 14,344 14,158 16, , % -12. All other carloads 22,083 23,158 23,766-1,075-1, % -7.1% TOTAL ALL CARLOADS 1,432,563 1,487,433 1,478,089-54,870-45, % -3.1% Trailers 124, , ,791-13,809-6, % Containers 1,034, , ,590 66, , % 15.9% TOTAL ALL INTERMODAL 1,158,220 1,105,351 1,023,381 52, , % 13.2% (1) - flour, animal feed, corn syrup, corn starch, soybean meal, DDGs, etc. (5) - primarily iron & steel; some aluminum, copper, etc. (2) - crude petroleum and all products of petroleum refining (6) - phosphate rock, rock salt, crude sulphur, clay, etc. (liquefied gases, asphalt, fuel oil, lubricating oil, jet fuel, etc.) (7) - cement, ground earths or minerals, gypsum, etc. (3) - wood raw materials such as pulpwood and wood chips (8) - scrap paper, construction debris, ashes, etc. (4) - overwhelmingly iron ore, but some aluminum ore, copper ore, etc. *Data are originations and are not seasonally adjusted. Source: AAR Weekly Railroad Traffic 750, , , , , , , , , , ,000 Average Weekly U.S. + Canadian Rail Traffic: Total Carloads + Intermodal Units 2006 (peak year) Data are weekly average originations for each month, are not seasonally adjusted, and reflect revisions to original reporting. Source: AAR Weekly Railroad Traffic % Change in Combined U.S. + Canadian Rail Carloads + Intermodal Units From Same Month Previous Year: Jan April April was down 0.1% from April and up 3.6% over April Data are based on weekly average originations for each month, are not seasonally adjusted, and reflect revisions to original reporting. Source: AAR Weekly Railroad Traffic `Rail Time Indicators May 4, Page 7 of 36

10 COAL Just when you thought coal couldn t get worse, it did. U.S. coal carloads fell 16.6% (85,719 carloads) in April from April, the biggest monthly decline on record. (Our data begin in 1988.) Average U.S. coal carloads of 107,379 in April were the lowest of any month since July The charts on the bottom show the top origination and termination states for coal carloads in. Wyoming accounts for more than half of originations. If you re interested in more on railroads and coal, you might consider obtaining the AAR s annual The Rail Transportation of Coal publication. The newest edition will be available in mid-may. It s free to AAR members, $50 to non-members. Send an to dkeen@aar.org for more information. 160, , , , , , ,000 Average Weekly U.S. Rail Carloads of Coal 2008 (peak year) Data are weekly average originations for each month, are not seasonally adjusted, exclude U.S. operations of CN and CP, and reflect revisions to original reporting. Source: AAR % Change in U.S. Rail Carloads of Coal From Same Month Previous Year: Jan April April was down 16.6% -1 from April and down 19. from April Data are based on originations, are not seasonally adjusted, exclude U.S. operations of CN and CP, and reflect revisions to original reporting. Source: AAR Weekly Railroad Traffic 10,000 9,000 8,000 7,000 6,000 5,000 4,000 Avg. Weekly Canadian Rail Carloads of Coal 2008 Data are weekly average originations for each month, are not seasonally adjusted, include CN and CP (including their U.S. operations), and reflect revisions to original reporting. Source: AAR % Change in Canadian Carloads of Coal From Same Month Previous Year: Jan April April was down 7.4% from April and down % from April Data are based on originations, are not seasonally adjusted, include CN and CP (including their U.S. operations), and reflect revisions to original reporting. Source: AAR Weekly Railroad Traffic Rail Originations of Coal by State: WY mil tons 55.1% Source: STB Waybill Sample WV 94 mil tons 11.3% Others 45.8 mil tons 5. KY 64.7 mil tons 7.7% Total: million tons PA 38.5 mil tons 4.6% MT 35.2 mil tons 4.2% VA 24.7 mil tons 3.0 % IL 20.6 mil tons 2. IN CO 18.9 mil tons 17.4 mil tons 2.3% 2.1% OH 14.9 mil tons 1.8% Source: STB Waybill Sample Rail Terminations of Coal by State: IL 79.7 mil tons 9. Others mil tons 40.2% TX 68.7 mil tons 8.2% MO 54.8 mil tons 6.6% Total: million tons VA 48.9 mil tons 5.9% KY mil tons 3.2% WI 36.9 mil tons 4.4% OH 40.8 mil tons 4.9% GA 32.2 mil tons 3.9% IN 31.2 mil tons 3.7% AL 27.2 mil tons 3.3% `Rail Time Indicators May 4, Page 8 of 36

11 CHEMICALS U.S. rail carloads of chemicals were up 1. (1,192 carloads) in April over April. Average carloads in April of 30,660 were the third highest of any April in history. The single highest-volume chemical carried by U.S. railroads is ethanol in, U.S. railroads originated nearly 325,000 carloads, equal to 1.1% of total carloads (see chart bottom left). Railroads originate and terminate chemicals in most states, but TX, LA, WY and IA (the top ethanol state) lead the way in rail originations of chemicals (see chart bottom right). If you re interested in more on railroads and chemicals, you might consider obtaining the AAR s annual The Rail Transportation of Chemicals publication. The newest edition will be available in mid-may. It s free to AAR members, $50 to non-members. Send an to dkeen@aar.org for more information. 33,000 32,000 31,000 30,000 29,000 28,000 27,000 26,000 25,000 24,000 Avg. Weekly U.S. Rail Carloads of Chemicals 2007 (peak year) Data are weekly average originations for each month, are not seasonally adjusted, exclude U.S. operations of CN and CP, and reflect revisions to original reporting. Source: AAR % Change in U.S. Rail Carloads of Chemicals From Same Month Previous Year: Jan April April was up 1. over April and up 2.7% over April Data are based on originations, are not seasonally adjusted, exclude U.S. operations of CN and CP, and reflect revisions to original reporting. Source: AAR Weekly Railroad Traffic Avg. Weekly Canadian Rail Carloads of Chemicals 13,000 12,000 11,000 10,000 9,000 8,000 7,000 6, Data are weekly average originations for each month, are not seasonally adjusted, include CN and CP (including their U.S. operations), and reflect revisions to original reporting. Source: AAR % Change in Canadian Carloads of Chemicals From Same Month Previous Year: Jan. - April April was up 0.7% over April and up 6.4% over April. Data are based on originations, are not seasonally adjusted, include CN and CP (including their U.S. operations), and reflect revisions to original reporting. Due to comparability issues, data prior to are not available. Source: AAR Weekly Railroad Traffic 350, , , , , ,000 50, % % 0.6% 0.4% 0.2% 0. U.S. Rail Carloads of Ethanol Ethanol as % of Total U.S. Rail Carloads '01'02'03'04'05'06'07'08'09' Source: STB Waybill Sample Up 65 AL 3.5 2% Rail Originations of Chemicals by State: (Millions of Tons and % of U.S. Total) Others SD 3.6 2% UT 3.9 3% NE 6.0 4% FL 7.7 IL 8.9 6% IA % TX % WY % LA % Total = million tons Source: STB Waybill Sample `Rail Time Indicators May 4, Page 9 of 36

12 GRAIN U.S. rail carloads of grain were down 17.2% (16,402 carloads) in April, their 10th straight significant year-over-year decline. It s not surprising that rail originations of grain are concentrated in the Midwest, with IL, ND, MN, and NE leading the way (see chart bottom left). Leading states for rail terminations of grain are often states with lots of need for animal feed (e.g., NC) or states from which grain exports leave the country (e.g., WA, LA, and OR see chart bottom right). If you re interested in more on railroads and grain, consider obtaining the AAR s annual The Rail Transportation of Grain publication. The newest edition will be available in mid-may. It s free to AAR members, $50 to non-members. Send an to dkeen@aar.org for information. 28,000 26,000 24,000 22,000 20,000 18,000 16,000 Average Weekly U.S. Rail Carloads of Grain 2008 Data are weekly average originations for each month, are not seasonally adjusted, exclude U.S. operations of CN and CP, and reflect revisions to original reporting. Source: AAR % Change in U.S. Rail Carloads of Grain From Same Month Previous Year: Jan April April was down 17.2% from April and down 6. from April Data are based on originations, are not seasonally adjusted, exclude U.S. operations of CN and CP, and reflect revisions to original reporting. Source: AAR Weekly Railroad Traffic 11,000 10,500 10,000 Average Weekly Canadian Rail Carloads of Grain 9,500 9,000 8,500 8,000 7, Data are weekly average originations for each month, are not seasonally adjusted, include CN and CP (including their U.S. operations), and reflect revisions to original reporting. Source: AAR % Change in Canadian Carloads of Grain From Same Month Previous Year: Jan April 3 2 April was down 2.8% from April and down % from April Data are based on originations, are not seasonally adjusted, include CN and CP (including their U.S. operations), and reflect revisions to original reporting. Source: AAR Weekly Railroad Traffic Rail Originations of Grain by State: MN 18.3 mil tons 11.9% ND 19.8 mil tons 12.9% IL 20.6 mil tons 13.4% Source: STB Waybill Sample NE 18.1 mil tons 11.8% Others 19.5 mil tons 12.7% KS 12.3 mil tons 8% SD 11.5 mil tons 7. OH 9.6 mil tons 6.2% Total: million tons IN 9.3 mil tons 6.1% IA 8.4 mil tons 5.4% MT 6.3 mil tons 4.1% Rail Terminations of Grain by State: WA 33.4 mil tons 21.8% Source: STB Waybill Sample TX 24.9 mil tons 16.2% IL 14.5 mil tons 9. Others 36.6 mil tons 23.8% CA 13.6 mil tons 8.9% Total: million tons GA 6.4 mil tons 4.2% NC 6.3 mil tons 4.1% OR 5.6 mil tons 3.6% LA 5.2 mil tons MN 3.4% 5.1 mil tons 3.3% TN 5.0 mil tons 3.3% `Rail Time Indicators May 4, Page 10 of 36

13 CARLOAD AND INTERMODAL TOTALS 375, , , , , , , , , ,000 U.S. Rail Carload Traffic: Jan April 2006 Data are weekly average originations for each month, are not seasonally adjusted, and exclude U.S. operations of CN and CP. Source: AAR Weekly Railroad Traffic U.S. Rail Intermodal Traffic: Jan April 275, , , , , , , , Data are weekly average originations for each month, are not seasonally adjusted, and exclude U.S. operations of CN and CP. Source: AAR Weekly Railroad Traffic ALL COMMODITIES EXCLUDING COAL 210, , , , , , , , , , ,000 Average Weekly U.S. Rail Carloads: All Commodities Excluding Coal 2006 (peak year) Data are weekly average originations for each month, are not seasonally adjusted, exclude U.S. operations of CN and CP, and reflect revisions to original reporting. Source: AAR % Change in U.S. Rail Carloads Excluding Coal From Same Month Previous Year: Jan April April was up 3.2% over April and up 5.4% over April Data are based on originations, are not seasonally adjusted, exclude U.S. operations of CN and CP, and reflect revisions to original reporting. Source: AAR Weekly Railroad Traffic ALL COMMODITIES EXCLUDING COAL AND GRAIN 190, , , , , , , , , ,000 Average Weekly U.S. Rail Carloads: All Commodities Excluding Coal and Grain 2006 (peak year) Data are weekly average originations for each month, are not seasonally adjusted, exclude U.S. operations of CN and CP, and reflect revisions to original reporting. Source: AAR % Change in U.S. Rail Carloads Excl. Coal & Grain From Same Month Prev. Year: Jan April April was up 6.7% over April and up 7. over April Data are based on originations, are not seasonally adjusted, exclude U.S. operations of CN and CP, and reflect revisions to original reporting. Source: AAR Weekly Railroad Traffic `Rail Time Indicators May 4, Page 11 of 36

14 INDUSTRIAL PRODUCTS Avg. Weekly U.S. Rail Carloads: Industrial Products* 130, , , ,000 90,000 80,000 70,000 60, (peak year) *Data include chemicals; paper; metal products; autos; crushed stone and gravel; metallic ores; and stone and glass products. Data are weekly average originations for each month and exclude the U.S. operations of CN and CP. Source: AAR Weekly Railroad Traffic % Change in U.S. Rail Carloads of Industrial Products From Same Month Prev. Year: Jan April * April was up 7.3% over April and up 10. over April *Data include chemicals; paper; metal products; autos; crushed stone and gravel; metallic ores; and stone and glass products. Data are based on weekly average originations for each month and exclude the U.S. operations of CN and CP. Source: AAR Weekly Railroad Traffic PRIMARY METAL PRODUCTS (MAINLY IRON AND STEEL) 14,000 12,000 10,000 8,000 6,000 4,000 Average Weekly U.S. Rail Carloads of Steel and Other Primary Metal Products 2008 Data are weekly average originations for each month, are not seasonally adjusted, exclude U.S. operations of CN and CP, and reflect revisions to original reporting. Source: AAR 10 % Change in U.S. Rail Carloads of Steel and Other Primary Metal Products From Same Month Previous Year: Jan April April was up 8.1% -4 over April and up 14. over April Data are based on originations, are not seasonally adjusted, exclude U.S. operations of CN and CP, and reflect revisions to original reporting. Source: AAR Weekly Railroad Traffic IRON AND STEEL SCRAP 7,000 6,000 5,000 4,000 3,000 2,000 Average Weekly U.S. Rail Carloads of Iron and Steel Scrap 2008 Data are weekly average originations for each month, are not seasonally adjusted, exclude U.S. operations of CN and CP, and reflect revisions to original reporting. Source: AAR % Change in U.S. Rail Carloads of Iron and Steel Scrap From Same Month Previous Year: Jan. - April April was down 5.3% from April and down 12. from April. Data are based on originations, are not seasonally adjusted and exclude U.S. operations of CN and CP. Data prior to are not available. Source: AAR Weekly Railroad Traffic `Rail Time Indicators May 4, Page 12 of 36

15 CRUSHED STONE, SAND, AND GRAVEL 28,000 26,000 24,000 22,000 20,000 18,000 16,000 14,000 12,000 10,000 Average Weekly U.S. Rail Carloads of Crushed Stone, Sand, and Gravel 2006 (peak year) 8,000 Data are weekly average originations for each month, are not seasonally adjusted, exclude U.S. operations of CN and CP, and reflect revisions to original reporting. Source: AAR % Change in U.S. Rail Carloads of Crushed Stone, Sand, and Gravel From Same Month Previous Year: Jan April April was up 9.3% over April and up 3.1% over April Data are based on originations, are not seasonally adjusted, exclude U.S. operations of CN and CP, and reflect revisions to original reporting. Source: AAR Weekly Railroad Traffic PETROLEUM & PETROLEUM PRODUCTS (CRUDE PETROLEUM, LPGs, ASPHALT, FUEL OIL, LUBRICATING OILS, ETC.) 16,000 15,000 14,000 13,000 12,000 11,000 10,000 Combined U.S. + Canadian Average Weekly Rail Carloads of Petroleum and Petroleum Products 9, ,000 Data are weekly average originations for each month, are not seasonally adjusted, and reflect revisions to original reporting. Source: AAR Weekly Railroad Traffic % Change in Combined U.S. + Canadian Rail Carloads of Petroleum & Petroleum Products From Same Month Previous Year: Jan. - April April was up 42.7% over April and up 47. over April. -2 Data are based on originations, are not seasonally adjusted, include CN and CP (including their U.S. operations), and reflect revisions to original reporting. Source: AAR Weekly Railroad Traffic MOTOR VEHICLES AND PARTS Combined U.S. + Canadian Average Weekly Rail Carloads of Motor Vehicles* 28,000 25,000 22,000 19,000 16,000 13,000 10, ,000 *Includes parts. Data are weekly average originations for each month, are not seasonally adjusted, and reflect revisions to original reporting. Source: AAR Weekly Railroad Traffic % Change in Combined U.S. + Canadian Rail Carloads of Motor Vehicles* From Same Month Previous Year: Jan April April was up 17. over April and up 25.6% over April Data are based on originations, are not seasonally adjusted, include CN and CP (including their U.S. operations), and reflect revisions to original reporting. Source: AAR Weekly Railroad Traffic `Rail Time Indicators May 4, Page 13 of 36

16 METALLIC ORES (OVERWHELMINGLY IRON ORE) 26,000 24,000 22,000 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 Combined U.S. + Canadian Avg. Weekly Rail Carloads of Metallic Ores 2008 Data are weekly average originations for each month, are not seasonally adjusted, and reflect revisions to original reporting. Source: AAR Weekly Railroad Traffic % Change in Combined U.S. + Canadian Rail Carloads of Metallic Ores From Same Month Previous Year: Jan April April was up 5.4% over April and up 23.3% over April Data are based on originations, are not seasonally adjusted, and reflect revisions to original reporting. Source: AAR Weekly Railroad Traffic LUMBER AND WOOD PRODUCTS + PRIMARY FOREST PRODUCTS Combined U.S. + Canadian Average Weekly Rail Carloads of Lumber and Primary Forest Products 12,000 11,000 10,000 9,000 8,000 7,000 6,000 5, Data are weekly average originations for each month, are not seasonally adjusted, and reflect revisions to original reporting. Source: AAR Weekly Railroad Traffic % Change in Combined U.S. + Canadian Rail Carloads of Lumber and Primary Forest Products From Same Month Previous Year: Jan April April was up 6. over April and up 38.7% over April Data are based on originations, are not seasonally adjusted, and reflect revisions to original reporting. Source: AAR Weekly Railroad Traffic PULP AND PAPER PRODUCTS 12,500 12,000 11,500 11,000 10,500 10,000 9,500 9,000 8,500 8,000 Combined U.S. + Canadian Average Weekly Rail Carloads of Pulp and Paper Products 2008 Data are weekly average originations for each month, are not seasonally adjusted, and reflect revisions to original reporting. Source: AAR Weekly Railroad Traffic % Change in Combined U.S. + Canadian Rail Carloads of Pulp and Paper Products From Same Month Previous Year: Jan April April was down 4. from April and up 2.3% over April Data are based on originations, are not seasonally adjusted, and reflect revisions to original reporting. Source: AAR Weekly Railroad Traffic `Rail Time Indicators May 4, Page 14 of 36

17 SEASONALLY ADJUSTED RAIL TRAFFIC `Rail Time Indicators May 4, Page 15 of 36

18 SEASONALLY ADJUSTED RAILL TRAFFIC, cont. Where to go for more information: Weekly AAR press releasess on railroad traffic are available on the AAR web site here. For a sample copy of an AAR Weekly Railroad Traffic report, Paul Posey at pposey@aar.org. Weekly Railroad Traffic is free to AAR members and available by subscription to others. `Rail Time Indicators May 4, Page 16 of 36

19 GROSS DOMESTIC PRODUCT (GDP) What is it and why is it important? GDP (the output of goods and services produced by labor and property in a country) measures the size of an economy and how fast it s growing. Assuming it s measured accurately, it s probably the single most conclusive piece of information on the health of an economy. The GDP figure that gets all the press is the annualized percentage change in inflation-adjusted GDP from one quarter to the next. It is revised several times as better data % Change in U.S. GDP vs. Rail Traffic become available. GDP and freight rail traffic have historically been closely correlated, although rail freight traffic tends to be more volatile than the economy as a whole, as the chart at right shows. The correlation isn t perfect, but it is strong and positive. The slight decline in rail volume in Q1 is mainly due to coal and grain, carloads of which do not correlate well with overall economic growth. What are the latest numbers? 2 16% 12% 8% 4% -4% -8% -12% -16% -2-24% bars = GDP line = rail traffic '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 Percentages are year-over-year. Traffic = carloads + intermodal Source: BEA, AAR According to the BEA s first preliminary estimate, released on April 27 and subject to potentially large revisions in the next couple of months, U.S. GDP grew at an annualized rate of 2.2% in the first quarter of. That s down from 3. in Q4 (see chart below left). Q1 growth was paced by higher personal consumption. The chart below right shows the contribution to GDP growth by various GDP components. Personal consumption of goods and services added 2.04 percentage points; exports added 0.73 percentage points; and change in business inventories added 0.59 percentage points. Government consumption and lower fixed nonresidential investment detracted from growth. The chart on the top left of the next page shows how personal consumption, which accounts for approximately 7 of GDP, has fared over the past few years. If it holds after revisions, the big jump in Q1 ($68 billion) will be the largest since Q4 and the second largest since before the recent recession. Most of the increase in Q1 was in goods, not services. Quarterly Real U.S. GDP Growth: Q Q4 (annualized % change from previous quarter) 6% 4% 2% -2% -4% -6% -8% Estimates for Q2 to Q4 are the consensus forecast by 50 leading economists surveyed by The Wall Street Journal in April. Actual Q1 : 2.2% (preliminary) Forecast Contributions to Change in GDP: Q1 (Figures are Percentage Points) Govt. consumption expenditures Imports Exports Change in private inventories Residential investment Fixed nonresidential investment Personal consumption - services Total = 2.2% Source: Bureau of Economic Analysis, Wall Street Journal. Personal consumption - goods Data are preliminary. Source: BEA - NIPA Table `Rail Time Indicators May 4, Page 17 of 36

20 $9,700 $9,600 $9,500 $9,400 $9,300 $9,200 $9,100 $9,000 $8,900 $8,800 $8,700 $8,600 $8,500 Total Personal Consumption* (billions of inflation-adjusted 2005 $, annualized) recession -3.4% = -$314 billion Source: Bureau of Economic Analysis - NIPA Table Q1 over Q4 : +$68 bil. $10,600 $10,400 $10,200 $10,000 $9,800 $9,600 $9,400 $9,200 $9,000 $8,800 Disposable Personal Income (billions of inflation-adjusted 2005 $, annualized) recession Source: Bureau of Economic Analysis - NIPA Table 2.1 The chart above right shows disposable personal income in recent years by quarter. Income growth has been modest. From 2002 through 2007, it rose an average of 0.6% per quarter. Since the recession ended, it s risen just 0.3% per quarter. The chart at right shows personal savings as a share of disposable income by quarter. Note how it rose during the recession as people saved for a rainy day. Note too how it s fallen since mid-. In Q1, it was down to 3.9%, its lowest level since the recession began in Q Personal Savings as a % of Disposable Income 7% recession 6% Q1 : 3.9% 4% Which brings up the question asked by Nouriel Roubini, professor of economics at New York University, as quoted in a Washington Post story on April 28: For how long can consumption grow much faster than income and households run down their savings? 3% 2% 1% Source: Bureau of Economic Analysis - NIPA Table 2.1 On April 25, the Federal Reserve issued its monthly Federal Open Market Committee (FOMC) statement in which it reviews the state of the economy. That statement said that Information received since the Federal Open Market Committee met in March suggests that the economy has been expanding moderately. The Committee expects economic growth to remain moderate over coming quarters and then to pick up gradually. Not exactly going out on a limb, but not unexpected either. In conjunction with the April 25 FOMC meeting, the Fed released its latest Economic Projections of Federal Reserve Board Members and Federal Reserve Bank Presidents. The table at right shows the Fed s consensus, or central tendency, 3 for GDP growth over the next few years. Note that the April Fed consensus for GDP Federal Reserve Consensus: Change in Real GDP* Date of Proj. * 2013* 2014* Jan. 2.2% - 2.7% 2.8% - 3.2% 3.3% - 4. April 2.4% - 2.9% 2.7% - 3.1% 3.1% - 3.6% *Q4 current year from Q4 prior year. Source: Economic Projections of Federal Reserve Board Members and Bank Presidents, April 3 More precisely, the central tendency is the range you get when you take the individual projections of the district bank presidents and Federal Reserve board members and throw out the three highest and three lowest projections. `Rail Time Indicators May 4, Page 18 of 36

21 growth in is slightly more optimistic than the January projection for, but the April projection for GDP growth in 2013 and 2014 is slightly less optimistic than the January projection for those years. 4 Alien Economists The most recent consensus of the 50 or so economists surveyed each month by The Wall Street Journal is that GDP will grow 2. in, 2.6% in 2013, and 3. in That s consistent with the Fed s projection for, but less optimistic than the Fed for 2013 and The WSJ survey was taken in early April. The WSJ reports that most of the economists on its panel think that the Federal Reserve won't take further action to spur growth this year as the economy appears to be on firmer footing. The Fed itself noted, in its April 25 statement, that it expects to maintain a highly accommodative stance for monetary policy by keep[ing] the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions are likely to warrant exceptionally low levels for the federal funds rate at least through late Where to go for more information: The most recent BEA news release on GDP, including links to detailed data tables, is here. BEA will release its second estimate of Q1 GDP growth on May 31. PURCHASING MANAGERS INDEX (PMI) and NON-MANUFACTURING INDEX (NMI) What is it and why is it important? The PMI is released by the Institute for Supply Management (ISM) and combines data on new orders, inventory, production, supplier deliveries, and employment. It is based on a survey of several hundred supply managers at manufacturers throughout the country and is considered an indicator both of actual on-the-ground conditions as well as near- to medium-term sentiment. The NMI is like the PMI, except that it tracks services. Manufacturing accounts for around 12% of U.S. GDP not as much as it used to, but the U.S. is still the world s top manufacturer. Much of what railroads haul, of course, consists of raw materials for manufacturing or finished manufactured goods. Services account for around twothirds of U.S. GDP and around 8 of private-sector employment. According to the ISM, a PMI > 50 indicates that overall manufacturing is generally expanding; a PMI < 50 indicates manufacturing is generally contracting. Likewise, an NMI < 50 indicates the services sector overall is contracting; an NMI > 50 indicates the service sector is expanding. What are the latest numbers? The PMI unexpectedly rose to 54.8 in April, up from 53.4 in March and 52.4 in February, the ISM reported on May 3. It s now at its highest level since June (see the bars in the chart at the top left of the next page). The PMI s new orders component rose to 58.2 in April from 54.5 in March, reaching its highest level since April (see the line in the chart on the top left of the next page). 4 Which reminds us of a Dilbert comic strip that originally ran on April 17, see here. The cartoon on this page is by Gabe Martin, author of the comic strip Borderline. `Rail Time Indicators May 4, Page 19 of 36