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Rail News: Rail Industry Trends

AAR: Congressional report found U.S. railroads, shippers mitigated most demand-related problems last year


Last year, U.S. railroads met unprecedented freight demand despite pockets of congestion and shipment delays, Association of American Railroads officials said, citing a recent Congressional Budget Office report.

Entitled “Freight Rail Transportation: A Review of the 2004 Experience,” the report determined railroads and shippers took measures to mitigate the impact of transit delays and increased shipment costs. For example, shippers consolidated shipments and stockpiled materials to avoid peak shipping periods.

“Railroads dramatically accelerated their hiring and training, acquired new equipment and modified their operations in order to increase capacity,” the report states. “[As] rail traffic continued to grow, railroads raised rates on certain commodities and services, [which] helped allocate scarce capacity to shippers who [needed] it most.”

However, railroads’ capacity will continue to be an issue this year as demand remains at a high level, especially during the fall peak.

“Certain factors that contributed to the surge in demand — increased international trade and intermodal shipping — are likely to continue to grow in the future,” the report states. “That raises questions about how the market will work to provide sufficient capacity for the transportation of freight and how federal policy will influence the mix of capacity among rail, road and water.”

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More News from 6/20/2005