(The Associated Press circulated the following on June 4.)
NEW YORK — A JPMorgan analyst said Wednesday automotive carloads are not likely to improve for North American freight railroads over the next several quarters, a day after General Motors Corp. announced four major plant shutdowns.
The largest U.S. automaker said it would close pickup and SUV factories in Janesville, Wis.; Oshawa, Ontario; Moraine, Ohio and Toluca, Mexico, as it battles with a growing consumer shift from gas guzzlers to smaller vehicles amid soaring gas prices.
Analyst Thomas Wadewitz said that although auto shipments on the rails have been weak for some time, he suggested GM’s announcement could cause further trouble by signaling a lasting trend away from heavier vehicles. A shift toward lighter vehicles would hurt volumes because it results in lower total shipment weight – even if the number of vehicles shipped remains the same.
Assuming production levels remain stable, the shift to cars would reduce railroad carloads by about 4 percent, Wadewitz estimates.
Wadewitz said Omaha, Neb.-based Union Pacific Corp., Jacksonville, Fla.-based CSX Corp. and Montreal-based Canadian National Railway Co. are the most vulnerable after the shutdowns, because they carry either all or a majority of General Motors vehicles from the four plants.
CSX spokesman Garrick Francis said he expects auto volumes will be affected by the closures, but believes the impact will be partially offset by GM’s plans for new small car production. CSX indirectly carries GM vehicles from three of the plants through exchanges with other rails.
Spokespeople for Canadian National and Union Pacific could not immediately comment.
In midday trading, shares of Union Pacific added 39 cents to $79.88. CSX lost 3 cents to $65.43, while Canadian National gained 20 cents to $53.30.
Norfolk Southern Corp. rose 20 cents to $65.70 and Burlington Northern Santa Fe Corp. gained 64 cents to $111.55.
Canadian Pacific Railway Ltd. lost 76 cents to $69.02.