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December 2009

Rail News: Rail Industry Trends

Industry Trends from Progressive Railroading December 2009

For those seeking even the slightest bit of evidence that the economy is slowly recovering, the Intermodal Association of North America (IANA) and Association of American Railroads (AAR) provided some last month.

IANA announced that North American intermodal volume in the third quarter clocked in at just under 3 million units, a 16.4 percent decline compared with third-quarter 2008's total. However, volume slightly increased vs. the second quarter, when loads dropped 18.7 percent year over year. Although domestic container volume rose 1.3 percent, international equipment volume tumbled 23 percent, registering a more than 20 percent drop for the ninth-straight quarter.

"Encouragingly, the rate of decline decelerated in every month of the third quarter, with September's result only 20 percent," IANA officials said in a prepared statement.

The AAR also reported that intermodal volumes began to incrementally increase in November's first week, when U.S. railroads originated 206,890 containers and trailers. Volume fell 9.5 percent compared with volume from the same 2008 period, but rose slightly vs. the previous week.

Glass Half Empty

However, there also was speculation that the economy isn't recovering much, if at all.

About 80 percent of road and transit contractors expect a construction market decline next year despite the influx of stimulus dollars, according to a survey released Nov. 13 by the Transportation Construction Coalition. Forty-six percent of the respondents expected a slight dip and 32 percent anticipated a severe drop in their state construction markets, and more than 76 percent expected state transportation departments to bid out less work in 2010 vs. this year.

In addition, FTR Associates' "North American Commercial Truck and Trailer Outlook" report issued last month projected that significant freight growth won't occur until sometime late next year.

"Unprecedented excess capacity created by a record freight drop from 2006 to 2009 will put a drag on equipment sales well into 2010, and possibly into 2011," said FTR President Eric Starks.



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