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11/26/2013



Rail News: Rail Industry Trends

Consumer spending outlook for holiday season more dim than bright, Baird says


The holiday shopping outlook for retailers remains guarded as the sluggish economic environment weighs on consumer spending, according to Robert W. Baird & Co. Inc.'s "Domestic Truck, Intermodal and Rail Trends" report for November.

Retailers also expect new healthcare laws, lapsed tax benefits and the government shutdown in October to have an effect on consumer spending, the report states.

"That said, some retailers have suggested they will use earlier and deeper discounts to encourage consumption and combat broader macroeconomic trends," Baird analysts said in the report. "While modest and decelerating consumer-related spend metrics remain a headwind to retail-related freight growth, fuel prices have moderated in the fourth quarter, which could provide a tailwind to consumer sentiment and holiday spending."

In the domestic intermodal market, demand still is solid, but the pricing environment remains challenging, the report states. In October, overall domestic intermodal grew 9 percent and domestic container volume climbed 11 percent year over year.

International intermodal volume rose 3 percent in October. BNSF Railway Co.'s reported metrics reflect some interruptions in the fourth quarter, consistent with rail industry anecdotes of derailments and delays, the report states.

Intermodal train speed has fallen 7 percent in the fourth quarter while overall train speed is down 10 percent. Terminal dwell time is up an average of 14 percent in the quarter compared with an average of plus-4 percent in the year's first three quarters, the report states.



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