Revenue Ton Mile
Categories: Metrics
The shipping biz is cray. Think about how much stuff is moved everywhere all of the time...massive amounts of raw materials, food, and, of course, to-be Amazon orders. Across the U.S., a lot of that stuff is moved on railroads.
To make this huge volume of stuff-moving easier to talk about, those in the transportation and shipping biz came up with a metric called a revenue ton mile, which is the weight of a shipment in tons multiplied by the number of miles the shipment traveled. Basically, it measures how they’re throwing their weight around...in the literal sense.
The more revenue ton miles, the more revenue railway companies are getting. Revenue ton miles also reflect how the economy is doing. More businesses doing business, and more consumers consuming, means more revenue ton miles. When the economy slows down, you can expect to see revenue ton miles drop.
Of course, this isn’t a linear relationship, especially since a lot of jobs aren’t reflected in revenue ton miles, like service jobs and sedentary desk jobs. Still, general trends of revenue ton miles are one of many economic trends you can look at to get a sense of whether the bulls or the bears are on their way, and who is here to stay.
