(Reuters distributed the following article by Michael Connor on November 11.)
MIAMI — U.S. railroad executives on Tuesday reported solid increases in late 2003 cargo volumes, lifting rail shares on optimism the big cargo haulers were picking up steam from America’s economic recovery.
Carloadings lifted by especially strong consumer products cargoes were up 5 percent so far in the fourth quarter at Union Pacific Corp, the No. 1 U.S. railroad, according to Chief Financial Officer Jim Young.
“Most markets continue to show growth,” Oscar Munoz, chief financial officer at CSX Corp, the large eastern railroad, said at a New York investors conference sponsored by Smith Barney.
CSX has seen carloads rise 7 percent over last year’s levels so far in the three months that will end Dec. 31, Munoz said.
David Goode, chief executive of Norfolk Southern Corp, the other big eastern railroad with 21,500 miles of track in 22 states and Ontario, said a pickup in volumes seen in October had continued during November.
Thomas Hund, chief executive of Burlington Northern Santa Fe Corp, said his company was adding fresh business from broad categories of shippers. Only chemicals and automotive customers were showing weakness, executives said.
“We are probably not in a position to actually declare the recovery is under way,” he said at the conference carried on the Internet. “I am probably one of the more cautious guys in our company, and I do like what I see.”
U.S. brokerage Merrill Lynch, which on Tuesday raised its investment ratings on CSX, Norfolk Southern and Canadian Pacific Railway Ltd to “buys,” said other winds helping freight railroads were moderating fuel prices and improved, more reliable operations.
“Volumes continue to climb at an expedited rate, with overall weekly volumes up 4.5 percent year-over-year,” Merrill said in a research note. “Excluding intermodal (or loads of mostly finished consumer and other goods), volumes climbed 5.3 percent, the fastest growth rate in 43 weeks ….”
Railroads carry mostly cheap, bulky goods such as coal, raw food and industrial parts. Demand for rail transport typically picks up with overall economic activity, especially as manufacturers increase production.
Rail shares were up amid declining U.S. equities trading, with the Dow Jones U.S. Railroads Index up 1 percent. Truckers and other transport groups were down in early afternoon trading.
CSX, which on Tuesday announced a cost-cutting restructuring expected to reduce staff by 3 percent, was up 81 cents, or 2.4 percent to $34.16. Norfolk Southern was up 1.8 percent, or 37 cents, to $21.41.
Burlington Northern rose 35 cents, or 1.2 percent, to $29.46, while Union Pacific was off 17 cents to $64.01, after surrendering earlier gains.