Executive Briefings

U.S. Rail on Strong Track Even as Nation's Economy Slows

U.S. rail shippers don't appear to be heeding the warnings of a national economic slowdown. Intermodal volume in May on the major U.S. railroads hit the highest level in history for that month, according to the Association of American Railroads. Intermodal traffic last month was 3.5 percent higher than the same month a year ago. Although carload volume was down 2.8 percent year-over-year in the same period, the big losses were because of slumps in the major commodities of coal and grain.

Sluggish grain shipments are more cyclical than a reflection of the health of the economy. And poor coal volume isn't because utilities aren't powering factories but because of a warmer-than-usual winter and increased federal regulatory pressure to burn natural gas rather than coal.

Besides, most of the business categories tied to manufacturing saw healthy growth on major railroads in May. Petroleum and related products jumped 49.2 percent, reflecting the continued growth of the domestic energy industry. Primary metal products traffic rose 4.3 percent, and shipments of motor vehicles were up 27.7 percent from a year ago. The only worrying decline was an 11.8 percent drop in chemical shipments.

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Sluggish grain shipments are more cyclical than a reflection of the health of the economy. And poor coal volume isn't because utilities aren't powering factories but because of a warmer-than-usual winter and increased federal regulatory pressure to burn natural gas rather than coal.

Besides, most of the business categories tied to manufacturing saw healthy growth on major railroads in May. Petroleum and related products jumped 49.2 percent, reflecting the continued growth of the domestic energy industry. Primary metal products traffic rose 4.3 percent, and shipments of motor vehicles were up 27.7 percent from a year ago. The only worrying decline was an 11.8 percent drop in chemical shipments.

Read Full Article