2020 Rail Industry Review

2020 Rail industry Review. What a year it has been. It’s safe to say 2020 is a year the rail industry will not be sad to see go. It wasn’t all bad in 2020 though. In 2020 Total U.S. rail car loadings were down 7.9%. December ex-coal railcar loadings actually ended up 1.0% over December 2019. Intermodal continued its strong run into the end of the year. In December. U.S. intermodal car loadings were up 12.2% over December 2019. For all of the 4th quarter. Intermodal loadings were up 11.2% over Q4 2019. Hopefully this will give us some momentum moving into 2021.

Railcar Loadings
Railcar Loadings December

As the rail industry and the broader economy start the new year. Optimists are hopeful easy comparisons and pent up demand will kick off what will be a robust 2021. Off nearly 8% from 2019. 2020 ex coal car loadings should set up for easy comps in 2021. We have also been steadily improving as the year has gone on. This is best illustrated in the chart above.

That said, economic indicators remain mixed as we enter 21. The BLS jobs report showed a loss of -140,000 net new jobs in December. The first negative monthly number since pandemic lows. Increasing case counts throughout November and December have seen new lockdowns and industries reimplementing restrictions. Leisure and hospitality industries saw significant losses in December. Like we said before though. It’s not all bad. November and December Industrial output had their highest readings since before the pandemic at Nov. 104.0 and Dec. 105.7. The purchasing manufacturers index also rebounded in December to 60.7% after a slight drop in November. We continue to monitor the signals.

Railcar Loadings Analysis

Railcar Load Table
Railcar loadings Table

Like we said at the top. Ex-coal rail car loadings were down -8% for all of 2020. Intermodal loadings -2.0% for all of 2020. Considering where we were back in May and June. That is a significant recovery.  Further. As railroads have begun their reporting seasons. Earnings have so far surprised to the upside against expectations. Despite declining year over year car volumes.

Total Railcars
Total Railcars YTD

Intermodal is clearly the story of 2020. To only be down 2.0% from 2019 would have seemed unbelievable in June. After some of the strongest recorded intermodal months in history, there has been a real comeback for the sector. That comeback was topped off by a 12% increase in December from Dec. 2019.

Railcar Loadings
Total Railcar Loadings
Railcar Average
6 Week Average Railcar Ex-Coal

Carload Commodity Categories

Grain was without a doubt the highlight sector of 2020. From September- December. Monthly year over year grain loadings were up at least 23%. December grain was up 27.9% over December 2019. For the year Grain carloads were up 4.5% over 2019.

Chemicals, the second largest non intermodal category behind coal. Carloads in 2020 were down 3.5% overall from 2019. Chemical carloads totaled 1.6 million for the year and accounted for 14.2% of non intermodal traffic.

Crushed stone, sand, and gravel, we have spoken on this beleaguered category several times. For 2020, total car loads were down 17.2% from 2019. An indication of the continuing to struggle oil & gas sector.

Lumber and wood products, down 3.7% in 2020. But, quarter 4 was up 10% year over year. That was against an already hot housing market last year. Combined with continued positive housing number reports. We are hopeful for this sector in 2021.

Economic Indicators

Mixed signals, it should be the song title for this economy. The first reading on 4th quarter GDP is still a few days away, but we have several other indicators leading to mixed feelings.

Positives.

From April to November 2020. The U.S. personal savings rate averaged 19%. In 2019 the savings rate was 7.8%. Cash heavy cosumers will hopefully looking for a place to spend pent up demand as reopenings continue in 2021.

Vaccine doses, while slower than many hoped are quickly gaining steam. To date over 20 million people in the U.S. have now received vaccination treatment.

We mentioned PMI and industrial output in the opening.

Housing Starts were up 5.8% in December, seasonally adjusted. To 1.669 million units last month. year on year homebuilding is up 5.2%. A reported “flocking” to the suburbs is creating a lot of new homes, which will hopefully lead to a lot of new home furnishings.

In the negative column.

Consumer confidence has dropped 3 straight months with the consumer conference reading for December at 88.6. Following 92.9 Nov. 101.4 October. This survey times very closely with increasing case counts as the winter surge came on and lock downs were reimplemented.

U.S. Consumer spending for November was -4% from October. -1.3% year over year.

Employment, one of the most heavily monitored indicators was negative in December. The bls reported a loss of -140,000 net new jobs in December 2020. The first negative reading since the pandemic losses.

Overall at the end of 2020, there were just under 10 million fewer jobs in the U.S. than there were in February 2020.  The unemployment rate sayed steady at 6.7%.

Looking Ahead

So what does the 2021 have in store for the world? Check back with us sometime in 2022 and we’ll let you know.

With Unemployment, and the labor force participation rate steady in December. A new administration and congress. Case counts still at our near record highs. Your guess is as good as ours.

BLS Employment
BLS Employment Data Dec 20

Finally the Fed Weekly economic indicator. The WEI Hit it’s closest mark to positive since the pandemic to close the year. unfortunately that number has dropped back off in January (not pictured).

WEI Data
WEI Data

We’re not here to argue -.65% vs. +.65% though. the Nike swoosh of a blue line above tells the story. With drops not recorded in recent history. We happily say goodbye to the year that was 2020. We look forward to being with you in 21.

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