(The following story by Dave Hannon appeared at Purchasing.com on January 25.)
BOSTON — The volume of materials shipped on the rails increased in the fourth quarter of 2006 and railroads are predicting the high volumes remain through the first quarter.
In a Reuters story, UP’s CEO Jim Young said the company expects 2-3% growth in rail freight volume in 2007, similar to the 3% growth it reported for 2006. UP’s volume so far in January were down 4%.
On the pricing front, Young said yield improvements plus fuel surcharges boosted average revenue per rail car by 8%.
Earlier this week, CSX announced a price increase.
BNSF reported a 4% increase in volume and record earnings in the fourth quarter. Matthew K. Rose, BNSF CEO, said, “Looking forward, we anticipate strong demand will continue for freight rail transportation, reflecting our diverse portfolio of businesses and leading to improved revenues and earnings.”
A Wall Street Journal story (registration required) said demand remains strong for coal shipments from the Powder River Basin in Wyoming, the nation’s largest coal-producing region, as well as grain and trans-Pacific deliveries. “And while railroads are being pinched by lower deliveries of homebuilding products, BNSF said that is being offset by robust petroleum, chemicals, plastics and construction shipments,” the Journal story said.
BNSF also unveiled a $2.75 billion capital commitment program for 2007.
Norfolk Southern reported slightly less robust volumes, but said average revenues made up for the difference. CEO Wick Moorman reported in the company’s financial statement, “We’re clearly facing a softer economy, at least in terms of some of our important markets and the overall surface transportation marketplace, but our traffic volumes are still at levels close to our all-time highs, evidence that the railroad renaissance is still alive and well.”
In an interview with Associated Press, Moorman said, “Even though we’re seeing this softness, and we saw volumes down a little bit year over year, if you look at our fourth-quarter volumes, they’re tracking at or above 2005.”