(The Associated Press circulated the following on December 9.)
NEW YORK — Shares of railroads and trucking companies drove higher Monday as investors appeared optimistic that President-elect Barack Obama’s massive infrastructure spending plan will help improve the ailing economy.
During an interview Sunday on NBC’s “Meet the Press” Obama spoke about his proposal for the largest U.S. public works spending program since the interstate highway system was created a half-century ago. The plan could create thousands of construction and other jobs and make operations easier for companies that rely on the nation’s roads and rail tracks.
Railroad traffic is expected to roughly double over the next 30 years, and the companies that run the nation’s track system have asked the government to boost funding to aid expansion plans. And the primary trade group representing the U.S. trucking industry, the American Trucking Associations, has repeatedly underscored the need to improve the nation’s bridges and highways. Obama’s plan could provide funds for those kinds of projects.
But in the near-term, trucking companies and railroads are trying to pave their way through what is expected to be a long and deep recession. On the tracks, companies have been hard hit by the steep decline in volumes led by vehicle and lumber shipments, but have still been able to post earnings growth as they hold onto strong pricing power. Trucking companies, meanwhile, are competing for less and less cargo and seeing prices dwindle.
Stifel Nicolaus analyst John G. Larkin said Monday he expects the trucking industry to shrink more through capacity reductions and bankruptcies over the next four months, boosting business for the remaining companies.
The Dow Jones industrial average rose more than 250 points in afternoon trading.
Railroad Union Pacific Corp. jumped $2.79, or 5.9 percent, to $50.28, while Burlington Northern Santa Fe Corp. added $2.09, or 2.8 percent, to $76.77.
Trucking company Werner Enterprises Inc. gained 86 cents, or 4.8 percent, to $18.65 and Arkansas Best Corp. rose $1.44, or 5.4 percent, to $28.24. Top of page