Freight doesn't lie

Discussion in 'Politics' started by Ricter, Jul 14, 2011.

  1. Ricter


    "U.S. Railroads Invest in Future as Freight Volume Surges

    (Area Development Online – Dean Barber)

    Freight can be a good barometer of economic activity. Simply stated, the movement of goods indicates commerce. Here are some stats:

    U.S. rail volumes excluding grain and coal shipments rose 7.9% to 4.6 million carloads in the quarter ended March 31, according to data compiled by the Association of American Railroads (AAR) in Washington. It was the second-highest increase in a first quarter, after last year’s 9.3% advance.

    On the trucking side, where a majority of America’s freight is moved, the American Trucking Association (ATA), predicts that freight tonnage will grown 24% by 2022 with revenue ticking up even more – 66%. “The trucking industry continues to dominate the freight transportation industry in terms of both tonnage and revenue, comprising 67% of tonnage and 81% of revenue in 2010,” ATA Chief Economist Bob Costello wrote in his forecast.

    Whether it is by rail or truck, there are reasons for the pickup in freight movement, including:
    • Increasing worldwide demand for coal in power generation – coal comprised approximately 37% of total U.S. railway carloads in 2010.
    • Growth in U.S. industrial production (projected at more than 3% for 2011) and intermodal traffic (first quarter 2011 intermodal shipment volume rose 8% year over year)
    • Measures by the U.S. government to boost American manufacturing exports (March 2011 export orders rose to their highest level in more than 20 years)

    From the customers’ point of view, rail transport is cheaper and more fuel-efficient than truck and ship transport. As a result, railroads are gaining market share. And some industry observers predict rail activity could double by the middle of the century, when the U.S. population is expected to grow by more than 100 million. North American rail-freight rates are predicted to continue to be the lowest – or one of the lowest – in the world, and the industry is expected to finance most or all of its capital requirements without public support.

    The fact of the matter is that shipping by rail is for the most part less convenient than by truck. But in an era of scarcity and pressure on costs, there has been a growing focus on efficiency. The best thing railroads have going for them is their inherent efficiency, be it in land usage or energy consumption or cost of moving a ton mile of whatever needs to be moved. That plays into railroads’ strength.

    In the past, railroads have not been known to put a lot of emphasis on customer service. As a result, there was little emphasis on improved transit times and providing consistent reliability. Some shippers, who felt they were captive to a single railroad, even have feared that complaining would somehow put them at risk of having to pay higher rates. Today, however, the industry is far more responsive to customer needs.

    In fact, investment by railroad operators for product and service improvement is surging. Fiscal 2010 witnessed a record-breaking $10.7 billion capital investment, and AAR has reported that the freight railroads will spend a record high of $12 billion in 2011 for manpower recruitment, installation of new rail tracks, and other capital projects. The railroad industry is also expected to hire 10,000 new employees in 2011. The U.S. is building an innovative rail network than can compete globally."

    Let me know if you want port TEU trends, they're looking good.
  2. Tsing Tao

    Tsing Tao

  3. Lucrum


    Nothing wrong with being an optimist. Provided of course there is a reason to be optimistic in the first place.
  4. Only time will tell. It would be great to see a rising level of freight.
  5. bone

    bone ET Sponsor

    Wow, and it would appear that there was not dollar one invested from the Obama administration. Oh, excuse me, that stimulus was a pay-off to the public sector and trade unions.

    Free enterprise exists ?

    They apparently have too much money. Raise the taxes on Railroads. Stat. We require economic 'fairness'.
  6. bone

    bone ET Sponsor

    Gauging by the construction leadtimes, it would appear that the railroads are getting ready for the former CEO of Bain Capital to be inaugerated as President in 2013.

    Their timing is actually perfect.
  7. Ricter


    You'll appreciate this article, then:

    "Truckload Shipping Volume, Rates Rose in June
    William B. Cassidy | Jul 13, 2011 8:51PM GMT
    The Journal of Commerce Online - News Story

    Longbow Research says shippers are shifting more freight to dedicated carriage

    Truckload shipping volumes increased 2 to 3 percent in June from the previous month, with rates rising 4 to 5 percent, according to Longbow Research.

    The equity research firm said some carriers reported the best volume and revenue weeks of the year to date in June, while others said March was slightly stronger.

    Longbow’s research supported economic indicators and anecdotal evidence that June was a better month for shippers and carriers than April or May.

    The Cass Freight Index for U.S. shipping reached its highest level in three years in June, growing 4.9 percent from May as companies filled back orders.

    “We saw our highest order volumes of the year” in late June, U.S. Xpress Enterprises Chief Operating Officer Jeffrey S. Wardeberg told The Journal of Commerce.

    As volumes rise and capacity contracts, shippers are rethinking their distribution strategies and truckload carriers are adding new services.

    “We continue to hear that shipper interest in dedicated relationships” is growing, Longbow said, “as shippers are determined to avoid any capacity shortages.”

    Demand for tank trailers from paint and chemical shippers also is rising, a positive indicator for manufacturing, Longbow said in a July 13 note to investors.

    The slow pace of economy recovery should keep truckload rate from climbing much higher than the 4 to 5 percent increases many carriers reported to Longbow.

    “The high single-digit pricing growth that some carriers were hoping for this year is looking unlikely unless we get a strong fall peak season,” the company said.

    Spot market truckload rates rose 4.5 percent in June from May, according to TransCore Freight Solutions, as truckload capacity dropped 7 percent."