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Rail Shipments up


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Omaha, Nebraska-based Union Pacific had its strongest weekly volume so far this year -- almost 187,000 carloads -- prior to Labor Day, Chief Financial Officer Robert Knight said at a Sept. 21 conference hosted by Citigroup Inc. It continues to see “solid demand” across most business segments, including shipments of industrial products, up 8 percent annually as of Sept. 15 for the quarter ending Sept. 30, he said.


Norfolk Southern, based in Norfolk, Virginia, maintains an outlook “which is still upbeat despite some of the macro indicators,” Chief Financial Officer James Squires said at the Citigroup conference on the same date. Total railcar shipments are up about 3 percent on an annual basis so far for the three- month period ending Sept. 30, he said.


Industrial volumes for Jacksonville, Florida-based CSX have increased about 5 percent since last year through August for the quarter ending Sept. 30, Vice President Fredrik Eliasson said yesterday at the Citigroup conference. Even amid recent “moderating,” the economy continues to grow and the company is “doing okay from a volume perspective,” he said.


Didn't they get the memo that the economy is crumbling?  ;)



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I think rail shipments needs to be contrasted with other economic indicators.  It is misleading just to look at one narrow window into the economy.  Contrast this to two declining quarters of shipping volumes from FedEx.  It's hard to say where the real economy is going.


Rail shipments aren't narrow at all, but don't take my word for it:


"Warren Buffett was asked to identify the single most important economic statistic he would choose if he was stranded on a desert island for a month and could only get one set of economic numbers. Buffett reported that his favorite “desert island indicator” would be freight car loadings.


The likely reason that Buffett is so fond of rail traffic as his “desert island indicator” is that it measures the amount of raw materials, inputs, and supplies moving around the country every week, and this should accurately predict the future direction of the overall economy. After all, the inputs transported by rail eventually get processed into inventory, final output, and goods for sale. "





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Intuitively, rail shipments seem like the best single measure to me too.


Raw materials, a large fraction of imported goods (from ports), coal (proxy for energy), and lots of finished good move around by rail.


If rail shipments are up a good amount yet the economy is supposedly slowing down, it seems like something else in the real economy should be down a lot to more than compensate.

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