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Rail News Home Rail Industry Trends

2/18/2010



Rail News: Rail Industry Trends

Double-digit carload growth in offing for Class Is, Baird analysts say


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Although U.S. rail traffic currently is up slightly vs. 2009 levels yet still well below 2008 volumes, a normal seasonal trend could produce double-digit year-over-year carload growth for Class Is in the months ahead, according to Robert W. Baird & Co. Inc.’s “Domestic Truck, Intermodal and Rail Trends” report for February. Most commodities — potentially even coal — could register traffic gains.

The strong fall harvest for corn, wheat and soybeans should continue to drive up agricultural product volumes in the coming months, the report states. Chemical volumes have increased the past two months, “with anecdotes of improved trends for plastics exports,” Baird analysts wrote in the report. In addition, automobile production levels remain stable vs. recent quarters.

Meanwhile, coal production “remains the lone laggard,” according to the report. However, “commentary from recent investor conferences suggests stronger export coal trends (particularly for metallurgical coal), as well as anecdotes of improved weather and industrial production-related electricity generation needs resulting in customer coal stockpile reductions, which could drive modest year-over-year growth for overall coal volumes in 2010,” the analysts wrote.

In the intermodal sector, domestic container gains continue to drive overall volume growth.

“Throughout the recent downturn, domestic intermodal has continued to gain market share from over-the-road truckload as fuel prices, scale efficiencies and better rail service remain key drivers of conversion,” the analysts wrote. “Looking ahead, we expect domestic container growth to continue as the broader freight environment firms.”

Moreover, “bottoming fundamentals” suggest the headwinds facing international intermodal volumes have diminished and growth will return as “easy comparisons lap and economic fundamentals improve,” according to the report.


Contact Progressive Railroading editorial staff.

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