UPS Sheds Leading Indicator Status

Railroads in particular are commonly seen as leading indicators, and weekly rail traffic volumes are closely followed. "A number of things moved by railroads will subsequently be processed or resold," says spokesman Pat Hiatte of Burlington Northern Santa Fe(BNI Quote).

In the fourth quarter, for instance, Burlington Northern's international shipments of containers and intermodal units rose 5.3%, while overall volume rose 3.7%, providing an apparent indication that consumer demand remains strong.

The shipments generally involve Asian-manufactured consumer goods, such as electronics and apparel, which move from West Coast ports to retail distribution centers. From distribution centers, the goods are moved either to store shelves or directly to consumers via FedEx or UPS.

Meanwhile, Union Pacific(UNP Quote) "absolutely considers itself to be a leading indicator," says spokeswoman Kathryn Blackwell.

The railroad hauls a broad variety of products that are shipped well in advance of the time they are consumed, she says. Included are more automobiles, both domestic and imported, than any other railroad; lumber and other building products; and large quantities of chemicals for manufacturing production.