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Rail News: Rail Industry Trends

Rail tonnage strong in '07, but '08 and '09 stacking up as different stories


Last year, U.S. industries transported 13 billion tons of goods valued at about $12 trillion, according to preliminary Commodity Flow Survey data released by the U.S. Department of Transportation’s Bureau of Transportation Statistics.

Trucks moved manufactured goods and raw materials weighing a total of 9 billion tons and valued at $8.4 trillion — more than two-thirds of the value and weight of freight shipped in the nation.

Rail was the second most-used mode by weight. Railroads moved 1.9 billion tons of freight, representing a 15 percent share. But by value, railroads transported $388 billion worth of freight, or 3 percent of the nation’s total.

In terms of overall ton-miles, rail accounted for 37 percent and trucks 40 percent of all freight moved last year.

According to each mode’s portion of intermodal shipments, rail generated the most ton-miles at 1.5 trillion. Combined truck-rail moves handled the most weight at 213 million tons. Intermodal shipments totaled $1.9 trillion in value, representing a 16 percent share, but accounted for only a 5 percent share by weight at 627 million tons.

Meanwhile, a 2008 that’s been challenging for U.S. railroads’ and truckers’ traffic because of the weak economy likely will be followed by an even more difficult 2009, according to Fitch Ratings. The recession will serve as a drag on their traffic and financial performance.

Demand will continue to be soft for automotive, wood product and international intermodal traffic moving via rail, according to the bond rating agency. However, changes in international coal supply trends and growing stockpiles at U.S. utilities (especially in the Southeast) will drive railroads’ coal volumes, while increased food production and exports will propel grain carloads.

Railroads “generally will retain their pricing power” next year, although lower traffic volumes could result in some pricing deterioration later in the year, Fitch Ratings said.

“Despite the rise in base rates expected in the early part of the year, overall yield is expected to decline, as fuel surcharges will be lower, reflecting the lower cost of diesel fuel,” the agency said. “In general, we expect the resiliency of the revenue environment to support railroad margins and operating cash flows, despite the expected decline in volumes.”

Contact Progressive Railroading editorial staff.

More News from 12/10/2008