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11/27/2006



Rail News: Rail Industry Trends

Bank of America Securities' shipper survey shows railroads' performance on the uptick as year winds down



How are railroads performing so far in the fall peak? Not too shabbily, according to Bank of America Securities’ fourth-quarter survey of about 1,400 rail shippers.

Thirty-three percent of the respondents said rail service had improved compared with 26 percent in the firm’s third-quarter survey. In addition, 58 percent of the respondents believed service hadn’t changed and only 8 percent said service had worsened compared with 19 percent in the third-quarter poll.

“These results are encouraging, though we note lower volume growth, which is putting less pressure on the networks, likely is partly responsible,” said analyst Scott Flower in a survey summary.

Canadian National Railway Co., BNSF Railway Co. and Norfolk Southern Corp. received the highest marks from shippers as having the best price-service relationships. Union Pacific Railroad received the lowest mark.

On average, shippers anticipated rail rates increasing about 4.9 percent during the next six to 12 months — down from a projected 5.3 percent rate hike noted in the third-quarter survey.

“We believe a variety of factors, such as lesser rail fuel intensity vs. alternative modes, may sustain pricing rates in the near term,” said Flower. “[But] loosening truckload capacity and lower fuel prices may lessen the pace of yield growth on a lagging basis.”


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