Rails Roll On Into The Fall

Although the railroad sector spent most of the summer chopping along (as did the broader market), between fears of a double-dip recession and the realities of ongoing strength, the fall has been off to a good start. Looking at the rail traffic data provided by the American Association of Railroads, September was another strong result for U.S. carriers and if this keeps up, the stocks will likely continue to find healthy bids. 


The Cars Of September
The data shows that U.S. carloads rose almost 8% on a year-over-year basis in September and achieved the highest average number of carloads per week since October of 2008. Industry-watchers may remember this as the high point before the bottom fell out in this recent recession. In any event, traffic was still down almost 8% from the 2008 level, while carloads did rise 2% on a sequential seasonally-adjusted basis. (For more, see Rails And Supplies Suggest More Volatility) 

What is interesting is that there appears to be a bit of a divergence between the United States and Canada. Although the four non-holiday weeks of this September were some of the most active weeks all year, Canadian traffic is showing less momentum. Now, it is true that Canada never got as bad as the U.S. and the momentum is still positive, but the relative outperformance gap seems to be shrinking a bit. 


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