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Rail News: Rail Industry Trends

Baird report: Spot market demand, traffic volume a tad better for rail sector


Spot market demand indicators are slightly above normal seasonal trend lines for both rail and truckload, according to Robert W. Baird & Co. Inc.’s December “Domestic Truck, Intermodal and Rail Trends” report. One key driver: Lean inventories are prompting more expedited shipping activity, the report states.

During November’s first three weeks, rail and intermodal demand reached its highest level this year. While the intermodal rail peak season continued through late November, agricultural products and chemicals displayed some year-over-year strength, but coal remained weak, the report states.

“Agricultural volumes have turned positive quarter to date as harvest (corn, wheat, soybeans) expectations are for a 5 percent increase over last year’s harvest. In addition, chemical volumes — which have historically been a good leading indicator — have improved on railroad anecdotes of improved trends in basic chemicals and plastics carloads,” Baird analysts said in the report. “However, coal remains a laggard as volume trends remain stable at lower levels with strong 2008 comparisons, and coal stockpiles remain a headwind to improved demand.”

Meanwhile, intermodal volume declined 7 percent in November vs. 11 percent in October.

“The impetus behind stable volumes remains domestic container intermodal as freight share shifts away from truck,” Baird analysts wrote. “While share continues to shift, competitive truck pricing continues to weigh down intermodal pricing. IMCs and railroads will benefit as truckload pricing power returns.”

Heading into 2010, rail volumes’ year-over-year comparisons will ease significantly and carloads remain stable, the report states.

Contact Progressive Railroading editorial staff.

More News from 12/17/2009