The AI is putting Caravan into it's armies, thus creating a stack that moves 1 per turn:

Tarth is sending their armies across my territory to fight Magnar, but the three armies in the middle of the screen all has a caravan in it, making them move at snail's pace (lagging far behind their main force. I was wondering why they were having so much trouble with the swamps (since it's tarth - all scouts), turns out they thought it wise to mobilize their caravans as well... genius.

A couple of their armies also has city militia units in it. I think I saw them make one by razing a city (as in, they razed a city and a militia poped out from it... not sure if that militia was doing the razing, or if that's where they are getting it from.)

Save: http://dl.dropbox.com/u/11827581/Caravan%20Armies.zip