What a road we have walked. While the world will never be the same, maybe, just maybe, railcar loadings will be. October was the most positive month for railcar loadings since pre-pandemic. Total average railcars loaded per week were 228,193 in October 2020. Excluding coal, loadings were 168,611, just -1.2% off from October last year. Exclude energy-related loadings like frac sand and petroleum products, and noncoal car loadings actually eclipsed October 2019.
October was a good month for railroads and railcar loadings. There is really no other way to say it. While there are still plenty of negatives, October was easily the best month since the start of the pandemic for railcar loadings.
In September, year over year railcar loadings, excluding coal, jumped from -9.9% in August to just -2.9% in September. October continued that trend. October 2020 Average carloads, ex-coal, were 168,611. Just -1.2% off of October 2019.
While domestic loadings continue returning to pre-pandemic and near-normal levels. Intermodal is blowing it out of the water, pun intended. October average weekly intermodal car loadings were 292,469. That is the highest month in recorded history. It is also a 33.5% increase over the April pandemic lows.
As October is traditionally the strongest month of the year, a record intermodal October implies companies feel good about the upcoming holiday season and possibly the first of the year. As they are stocking up on inventory.
Total carloads year to date of course remain well below 2019 levels, but those set up for some very positive comparables for the railroad industry in 2021.
Through October 2020. Total ex-coal carloads are down -9.23%. Intermodal year to date has managed to make up significant ground. Intermodal is now off only -4.32% through the same period 2019. If these loads continue improving, 2021 is shaping up to be a positive year for the rail industry.
Turning to the broader economy, economic indicators there too continue to improve. While it is not all roses, and the pessimist could certainly find ground to make their argument. The overall swath of data is broadly trending positively.
In October, the U.S. economy added 638,000 net new jobs to the workforce. September was 672,000, but remember that included 200K in Government jobs coming off from census work. October’s 638,000 dropped the unemployment rate a full point, from 7.9% to 6.9%. Even better, the labor force participation rate ticked up .3% points to 61.7% after backtracking slightly in September.
The New York Fed’s weekly economic indicator improved to -3.81% in October, improved from -5.22% in September. Maybe best of all. On October 29th, the BEA released a preliminary read on U.S. GDP for the 3rd quarter (July-Sep). It showed a record 33.1% quarter over quarter increase in GDP. While that number is of course skewed by the pandemic wrecked Q2. It exceeded analyst estimates and confirmed what until then we could only anecdotally hope was a better than expected recovery.
Housing starts in September were at an annualized rate of 1.415 million, with single-family homes reaching the highest level since 2007. Purchases of new auto sales notched a second straight month at a 16+ million annualized rate. Also, consumer savings rates continue at unusually high levels, indicating consumers have a lot of spending power as things continue to recover. We are very curious to see reports for the Christmas season after the first of the year.
Finally, one indicator we do not touch on often. Rail cars in storage. The number of the North American railcar freight fleet that has not been moved or loaded in the previous 60 days. Rail cars in storage have seen a significant drop from their Pandemic highs.
At the beginning of 2020. Railcars in storage sat right around 400,000 cars. June and July of 2020 saw railcars in storage of well over 500,000 cars. That number has ticked down monthly since. In October the number of railcars in storage was 439,557 freight cars. We’ll continue to watch this number and would love to see it get back under the 400,000 mark.
Since May 11,910,000 total jobs have been recovered from the Pandemic. In March and April, the BLS reported 22.16 million jobs were lost. Our 12 million recoveries are well ahead of where most expected by this time. It leaves us with right at 10 million to go, to get back all of the pandemic losses. We look forward to watching the data in the coming months.
Grain continues to be the standout darling of the railcar categories. In October, grain notched a 25.5% increase over October 2019, following its 27.8% year over year increase in September. Total grain carloads for the year have now eclipsed 2019. You read that correctly, Through October, more carloads of grain have been shipped than had been at this point last year. While we are only .8% above YTD 2019. The idea of any category being ahead of 2019 feels almost farfetched.
Iron and steel scrap also turned heads in October. Notching a 29.1% increase over October 2019. They also had similar increases in September and point to positive signs for the metals and manufacturing industries.
Chemicals, the second-largest category to only coal were down -1.8% vs October 2019. This is the smallest decline since the pandemic. This incredibly important category continues to regain lost ground. Lumber and wood products were up 5.0% in October. An expected indicator from the near-record housing starts levels we continue to see.
The two biggest laggards excluding coal are probably easy to guess. Crushed stone, sand and gravel, an important material for the FRAC industry was down 16.0% YOY. Petroleum products saw a 20% decline in October. The U.S. energy market continues to struggle with lowered oil demand. We’ll continue to watch this against the backdrop of oil prices going into 2021.
Overall, 10 of the 20 rail commodity categories saw increases in October. Tying February and March for the high watermark of the year. From April through August, the most category increases in any one month was 3.
Where we go from here, is anyone’s guess; was the opening sentence of September’s look ahead section. It still feels fitting here. That said, October would definitely have to be marked down as a win for the recovery column. As of the week of 11/7/2020, The NY Federal Reserve’s weekly economic indicator showed an annualized GDP rate of -2.68%. That is the highest reading since pre-pandemic. It continues to move in the right direction. It is quite an improvement from -11.5% pandemic lows.
With the election now behind us and multiple companies announcing 90%+ phase 3 vaccine trials over the past few weeks. For the first real-time, there may be a glimmer of light at the end of the tunnel. That said, new cases are at record highs while the mortality rate continues to decline, hospitalizations have increased. If new lockdowns are imposed by state and local governments, it could derail recovery efforts.
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