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March 2009

Rail News: Rail Industry Trends

Industry Trends from Progressive Railroading March 2009

A Gloomy Forecast for Carload Volumes, Car Orders in ’09

It’s going to go from bad to worse for North American railroads. The recession already has heavily impacted traffic for U.S., Canadian and Mexican roads, as evidenced by the charts at the right. And the roads shouldn’t expect those number to rise much in the coming months, according to transportation forecasting firm FTR Associates’ latest railroad equipment and deliveries outlook released last month.

North American carload volumes are projected to decrease by a “stunning” 13.1 percent in 2009, marking a third-straight annual decline and dropping carloads to 1998 levels, according to the report.

“A bounce-back is expected to start in the second half of 2010, [but] it will be 2013 before carloadings return to the volumes of 2005 to 2008,” FTR said.

For U.S. railroads alone, ton-miles are projected to decline 9.4 percent this year, which would represent the largest year-over-year drop since 1982, when ton-miles fell 12.3 percent, according to FTR.

Rail-Car Orders to ‘Fall Sharply’

Meanwhile, rail-car orders already have begun to weaken after posting an annual rate of 17,000 units in the fourth quarter, when orders plunged 45 percent to 4,300 units — the lowest level since first-quarter 2002 — and deliveries dropped 12 percent, FTR said.

“The recent collapse in freight demand has yet to work its way through the system and reach the new equipment market,” the report states. “As such, orders are expected to fall sharply as more equipment is idled and put into storage.”

FTR predicts that rail-car orders will continue to decline the next several quarters and, by year’s end, reach their lowest annual total since 1985. In addition, deliveries will drop to 21,500 units in 2009 and 11,700 units in 2010.


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