(The Associated Press circulated the following story by David Twiddy on November 8.)
KANSAS CITY, Mo. — The convergence of an improving economy, increased international trade, bumper crops and higher fuel prices has led to a record-setting year for U.S. railroads.
During one week last month, the rail industry moved the most freight volume in its history: 33.1 billion ton-miles, eclipsing the 32.7 billion ton-miles mark set a week earlier, according to the Association of American Railroads.
Through the end of October, railroads had moved 1.3 trillion ton-miles this year, or 4 percent more than at the same period last year. A ton-mile is an industry standard measurement of one ton of goods moving one mile.
That boom in volume has led to rising profits for railroad companies and many new jobs. For example, Kansas City Southern last week reported a $6.8 million, or 158 percent, increase in third-quarter profits from a year ago.
It’s also caused headaches for both the companies and their customers. Companies said they’ve had to scramble to buy new locomotives, schedule more trains and hire more people.
“The rail industry has been carrying record tonnage, but the growth had been a more measured pace, 3 to 5 percent,” said Steve Forsberg, with Fort Worth-based Burlington Northern and Santa Fe Corp.
The company hired 2,300 entry-level conductors this year compared with the usual 800. “This year, we’re experiencing three years of normal growth in a single year. That’s being hit with a very big wave,” Forsberg added. “We take our hats off to our operations department.”
Not everyone does: Yellow Roadway Corp., one of the nation’s largest trucking companies, uses the rails as a way to save money on moving trailers of goods long distances. Chief Executive Bill Zollars said Kansas City-based Yellow has had to move 20,000 shipments back onto highways this year because there wasn’t room on railroad networks.
“We usually move 26 percent of our (shipping) miles over the rail,” Zollars said. “We’ve had to be a lot more selective this year because the rail service has been so poor.”
The biggest surges have come from a recovering economy that’s shipping more manufactured goods and needing more raw materials. In addition, increased imports from Asia have required more trains to deliver goods entering the country at West Coast ports.
Coal shipments also have increased as power plants, suffering from the high price of natural gas, are turning back to coal to power their generators.
CSX Corp., based in Jacksonville, Fla., said it saw a 5.7 percent increase in coal shipments this year, compared with the 1.3 percent increase officials were expecting. Spokesman Gary Sease said moving coal makes up almost a quarter of the company’s revenues.
The only types of material that haven’t seen an overall increase on the rails this year are motor vehicles and grains.
While Yellow Roadway has struggled to find room for its shipments on the rails, many trucking and container companies have continued to turn to railroads in response to high fuel prices. Intermodal volume, or the amount of trucking trailers and other containers carried on the rails, is up 9.6 percent from the same period a year ago.
The high cost of fuel also has affected railroads; diesel-fuel prices have risen more than 70 percent from a year ago.
John Bromley, a spokesman at Omaha, Neb.-based Union Pacific Corp., said that the company’s trains consume 1.3 billion to 1.4 billion gallons of fuel a year.
“That has had a huge impact on us,” Bromley said. “If it goes up or down a penny (per gallon), that’s $13 million.”
Railroad officials said they will have to solve their labor and capacity problems soon as they foresee the growth surge extending well into 2005.