The Association of American Railroads released its Rail Time Indicators report last Wednesday. October United States rail carloads were down 15.3 percent from October 2008 while intermodal traffic was down 11.2 percent. For the first ten months of 2009, rail carloads were down 17.9 percent while intermodal traffic was down 16.2 percent. Canadian carloads and intermodal traffic were down at double-digit rates as well.

Food, Chemicals, Petroleum, and Waste/Scrap were the better-performing shipment categories. Forest Products, Metals, Motor Vehicles, and Stone/Gravel/Sand were the worse-performing shipment categories.  One of the big drivers of the rail carload slowdown is Coal shipments. Coal shipments are down because Electric power coal stockpiles are at historical highs and the price of Natural Gas is very low at this time. Electric power coal stockpiles are at historical highs due to the weak economy and low demand for energy.

These two drivers of the currently low-level of electricity generation demand for Coal might unwind from their current levels, but are unlikely to do so quickly. In addition, the weakness in the Forest Products and Stone/Gravel/Sand shipment categories is due to the massive slowdown in new construction activity and this factor is unlikely to turnaround soon or rapidly. Rail shipments the rest of the year are likely to remain weak.