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Pains For Trains From Automobiles
With global freight costs collapsing, as China trade dries up, status-quo-hugging talking heads have point to America's car sales and picture some islandic isolation that means investors in US equities are immune. Well that little dream just burst. Rail freight carloads tumbled 5.1% in October, dramatically accelerating the 1.6% drop in Q3 as a strong dollar crimps exports, retailers whittle down excess inventory and energy investment stalls. Until recebtly, the one bright spot in rail traffic was auto shipments... but even that just plunged and is now at the seasonally weakest since 2008.
Everything was awesome... then October hit and a decline in consumer-related cargo this quarter is adding to weakness in industrial and energy traffic.
While it’s too early to tell if something “drastic” is happening to the economy, “it does feel kind of like a soft, flat, sort of wait-and-see environment,” said Union Pacific Chief Financial Officer Rob Knight at a Credit Suisse Group AG conference last week. The rail industry provides detailed weekly carload reports with only a three-day lag, giving one of the most current looks at shipping demand.
The railroad weakness adds to U.S. economic indicators that have been sending mixed signals.
Railroad intermodal traffic, which rose in the previous two quarters, has fallen 1.3 percent since the beginning of October. Intermodal consists mostly of consumer goods that are moved in containers that can be switched between ships, trains and trucks, and accounts for almost half of the industry’s carloads.
The excess inventory that’s dragging on intermodal carloads is also hurting U.S. growth, said Tim Quinlan, an economist at Wells Fargo & Co. The economy in the fourth quarter may expand about 1.5 percent at an annualized rate, he said. Growth was 2.2 percent in the third quarter from a year earlier.
“That slowing is due mostly to a drag from net exports and a significant drag from inventories,” Quinlan said.
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One of the few bright spots for railroads has been automobile shipments... but seasonally, it is now at its weakest since 2008 on a percentage change basis...
Rail and truck stocks have pointed to economic weakness the entire year, said Jason Seidl, a railroad and trucking analyst at Cowen & Co...
“The economy is sluggish. That’s clear,” Seidl said. “We’ve seen a slowdown for sure.”
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"you're going the wrong way!"
Who needs a new vehicle when you can finance a used car for 84 months?
actually you can also lease 3 year old cars, a growing sector.
They should put the scene from the movie where he keeps saying the F word over and over to the rental car clerk.
Old Yeller raising rates will boost the sagging economy. Or the US BLS will adjust inflation lower boosting real GDP. Any lie will do.
The US BLS inflation calculator is good for a laugh:
http://www.bls.gov/data/inflation_calculator.htm
We don't need no stinking economic improvement, we just need better "indicators".
Faux is Faux is Faux you know
welcome to the Depression bitchez!
That title pun.... "You have fail"
Business is now slower than at the depths of the last crash. Anyone who thinks the Fed is hiking anytime soon has shit for brains!
Unless they're trying to crash the economy.
Percentages are for bettors. Idk if that means a anything or is spelled correctly just try to imagine a world with no welfare for corporations. Puts me to sleep
If Buffett would have let the Keystone pipeline through - his railroads - would have been moving lots of pipeline material, fuel, supplies, pickup trucks, etc in the region his railroad controls. Yes, it might hurt a few years down the road - but he is losing money now!
Buffet can munch on my meatus cockus
Well lets see.......I can get a new shiny car, with an 8 year car loan now.......At the true current inflation rate, (Not the fiddle faddle reported by the BLS to social security recipients waiting on a COLA) I figure in another ten years, 30 year mortgages will be available for car purchases.......Of course the car will be pushing up daisies in the local auto graveyard long before its paid off, but hey it will keep a politician employed, and create auto worker jobs for the labor unions, so be proud...........