(The following Bloomberg News article appeared on the Omaha World-Herald website on September 4.)
WASHINGTON, D.C. — Burlington Northern Santa Fe Corp. and Norfolk Southern Corp. increased rail shipments by about 10 percent last month as rising factory orders and industrial production boosted U.S. demand for freight hauling.
In the western United States, Burlington Northern carried 9.8 percent more freight than a year earlier, led by rising Asian imports, the Washington-based Association of American Railroads reported Friday. In the East, Norfolk Southern increased shipments 10.5 percent.
Their performance wasn’t matched by their closest competitors. In the West, Union Pacific increased freight hauling by less than 0.1 percent, the railroad association said. In the east, CSX Corp. increased shipments by 1.5 percent.
Factory orders rose 1.3 percent in July, the U.S. Commerce Department said Thursday, and industrial production in August rose 0.6 percent, according to a Bloomberg survey of economists.
Shipments of consumer goods by rail-truck combination set an August record of 876,056, the rail association said.
In the week ended Aug. 27, CSX’s average train speed, which reflects the number of delays, rose to 20.8 mph from 19.8 a month earlier. In last year’s third quarter, the average speed was 21 mph. Part of the reason for the earlier decline was delays in switching cars between trains, the rail association said.
Union Pacific’s speed in the same four weeks fell to 21.2 mph from 21.4, compared with an average of 22.9 in the third quarter of 2003. Its delays have been caused in part by crew shortages, the company said in a letter to customers last month.
“In the west, it’s clearly a case of Burlington Northern gaining market share” as customers with a choice of railroads shift freight away from Union Pacific, said Rick Paterson, a New York-based UBS Securities analyst. In the east, Norfolk Southern is gaining at CSX’s expense because truckers seeking faster service choose Norfolk, Paterson said.
Union Pacific will regain most of the lost business when its service improves, said Paterson, who rates the Omaha-based company “buy” and said he doesn’t own the stock.