Rails Build Traffic with Scrap

When you look for green shoots, think scrap.

Railcar loadings of waste and scrap materials bound for recycling are usually the cheapest of raw materials. That makes them an early sign of demand when factory activity is picking up or winding down.

For the week ending June 20, major U.S. railroads had their strongest volume of scrap hauls since the end of February. That is in keeping with scattered but persistent signs of new life – what some call green shoots – in the industrial economy.

Overall, large U.S. carriers reporting to the Association of American Railroads hauled 261,717 carloads of bulk materials and equipment in the latest week, about 240 loads below the June 13 week. Volume was 17.7 percent lower than in the third week of June 2008, a slight improvement from the 19 percent year-over-year decline as of June 13.

Intermodal loadings in the June 20 week were 187,759, or about 1,800 behind a week earlier and a mildly worse year-over-year decline of 17.8 percent. In the broader estimate of ton-miles, railroads have performed at a consistent pace for three straight weeks.

In a wide number of cargoes, the latest week’s performance was almost even with or slightly behind the second week of June, suggesting little overall change. Chemical shipments – the second-largest category for railroads and another cargo that is sensitive to factory demand for inputs – were up a bit at 25,767 loads.

Likewise, metals and products that reflect intermediate production were mildly higher in the latest week, in keeping with the recent signs from chemicals and scrap demand.

Two cargoes related to road or building construction – crushed stone, sand and gravel plus a grouping of glass, clay and stone products – were down slightly from a week earlier. Lumber and wood product shipments were up, while pulp and paper loads were about even.

Contact John D. Boyd at jboyd@joc.com.