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12/3/2004



Rail News: Rail Industry Trends

NS, UP continue to be one of best and worst service-metric performers, Smith Barney/Citigroup says



Norfolk Southern Railway's average train speed has dipped to 21.9 mph so far during the fourth quarter — the Class I's lowest average for all of 2004, according to Smith Barney/Citigroup's ground transportation research report for week No. 47, which ended Nov. 26.

"We believe the primary factor for the recent decline is a sharp increase in bulk commodity traffic," said Smith Barney/Citigroup Managing Director and Progressive Railroading columnist Scott Flower in the report. "Coal volumes have increased 11.4 percent through the fourth quarter to date (Nov. 20)."

NS has been one of the best-performing Class Is in 2004 — with a large-road best cars-on-line average of 188,932 units and average terminal dwell time of 25.9 hours so far in the fourth quarter — resulting in strong traffic volume growth and fairly consistent operations, Flower said.

"However, as the winter season approaches, we note the potential for weather to adversely impact service metrics at each of the Class Is," he said.

Meanwhile, Union Pacific Railroad has shown "only minor signs" of service metric improvements of late, with a quarter-to-date average train speed of 21.1 mph, cars on line totaling 326,402 units and terminal dwell time of 34.7 hours.

"While we had hoped to see signs of sequential improvement in the company's operations through the fourth quarter, service metrics have been trending downward in recent weeks," said Flower, adding that cars on line have risen 2.4 percent, which could indicate a fluidity decrease throughout UP's network.

On the flip side, Canadian Pacific Railway is showing "marked improvement" in average train speed compared with last year. The railroad's quarter-to-date average speed of 29.6 mph is up 18.5 percent.

"Canadian Pacific … has improved network fluidity, allowing the company to capitalize on the robust freight demand environment," said Flower. "In addition, Canadian Pacific has announced that it has entered into agreements with other Class Is that are expected to improve service efficiencies."


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