Rail shippers of all commodities should breathe a sigh of relief as the fall "peak season" kicks into high gear, or at least that is the message from the CEOs of all the major North American railroads. Despite record volumes of intermodal containers, grain and other commodities that traditionally hit their peaks from August until December, rail executives have given written assurance of trouble-free rail service for the remainder of 2006 to Surface Transportation Board Chairman W. Douglas Buttrey. Ever since the rail service debacles of 2003 and 2004, the STB, which regulates rail service and rates in the U.S., has asked railroads to warn shippers if they expect problems during the traditional peak demand period in the fall months and to describe how they plan to meet customer demand and provide acceptable service.
In letters to the STB, 18 rail executives told Buttrey that they expect freight volume to remain strong for the remainder of the year, but that congestion should not be an issue. For example, Michael Ward, chairman, president and CEO of CSX Transportation says that "improvements have been achieved in virtually all measurements," so the rail carrier can absorb additional fall peak traffic. He points to a 14 percent improvement in terminal car dwell time and an almost 50 percent improvement in on-time originations for the first half of 2006 compared with the same period in 2005.
Arthur Shoener, president and CEO of the Kansas City Southern Railway, says his railroad is completely recovered from last year's hurricanes and listed capacity-expanding initiatives such as its new intermodal service from the growing Mexican port of Lazaro Cardenas and the new double track mainline on the Meridian Speedway in Louisiana.
All the rail executives credited large infrastructure and equipment investments their companies are making for improved performance levels and for their confidence in continued good service. Matthew K. Rose, chairman, president and CEO of the BNSF, points out that between 2002 and 2006, his railroad invested about $10bn in its system, not counting rail car acquisitions.
"As long as our return on invested capital continues to improve, we will continue investing to expand our railroad's capacity," says Rose.
|"Without market-based adjustments to our rate structure, we cannot invest and expand to meet the ever-growing transportation demands of our many customers."|
- Charles W. Moorman of Norfolk Southern
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