The train index
First Trust Blog looks to freight trains as indicators on the economy:
"To paraphrase, when trains have 100 or more cars, the economy is doing well, but during recessions, trains often have just 60-70 cars. We have tested this anecdotal evidence over the years, and we’ve found it to be a fairly good gauge of economic activity. It also gives us something to do when we are stopped by a train. It’s not perfect, and it’s only anecdotal, but we love the information. One thing to remember is that during recoveries not “all” trains have 100 or more cars on them. However, during recessions, very few are 100 or more cars in length."
"To paraphrase, when trains have 100 or more cars, the economy is doing well, but during recessions, trains often have just 60-70 cars. We have tested this anecdotal evidence over the years, and we’ve found it to be a fairly good gauge of economic activity. It also gives us something to do when we are stopped by a train. It’s not perfect, and it’s only anecdotal, but we love the information. One thing to remember is that during recoveries not “all” trains have 100 or more cars on them. However, during recessions, very few are 100 or more cars in length."
We have lots of trains passing through, so this hypothesis will give me something to ponder in the future....I will report back.
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Thanks, Ray. I won't be so irritated when I am held up in traffic by a long train.
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I am sorry to burst anyone's bubble but:
Trains moved only 14.7% of the "freight tonnage" in America in 2009. Rail is subsidized heavily by the government and they have a very hard time staying profitable. Contrast that with the 68% of freight tonnage moved by truck. I recommend studying trucking as a better barometer. The Cass freight index (they are a very large broad based freight payment company)fell 8.6 percent in July the first decline in 6 months. While overall volumes have leveled off perhaps--keep in mind that they have declined remarkably since 2008. Every time the President speaks, business and industry begin to shake. It is very difficult to feel good about anything when you go to sleep at night and have no idea what the new rules "change" will be when you wake up.
"...and the signals flash through the night in vain"
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But: a) I can't count trucks like the number of train cars and b) just because it is 14.7% of hauling couldn't it still be a barometer? Would rail be way up and trucking be way down? I guess that would allow it to deceive?
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a)true
b)yes but remember it is artificially propped up by government subsidies. What happens to their volume as those subsidies increase? I think it (rail volume) is up as trucking is down. You have great points and they are interesting to study. I wish I had better news.
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As it was stated, it's just something to ponder. I do know watching the trucking index gives you about a 3 month look into the future for many types of goods. It's common for business to start ordering 3 months out.
Trains haul things that that nobody is in a hurry for. Trucks haul things that they wanted yesterday much more often than not. Also, many things on a train are going to end up on a truck, making trucking a better indicator.
Look around you on the highways for a snapshot, especially in a crossroads like Ohio. Flatbeds are a good one to watch. They are the first trucks to halt as things get slower. They're often hauling the building materials that indicate progress. If you're seeing very few flatbeds, some box vans, and a majority of reefer trailers, things are slow. If you don't see any trucks, not even reefers(they're bringing your food), get the bunker ready.
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