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AAR reports decreased US rail traffic for 2015
This was to be expected given the state of the world economy. But at the rick of starting a war of words between the left and right of the railfan community, the Obama administration has not helped the situation much either especially with its “out-of-control” EPA.
Its interesting to note with coal taken from the equation traffic is still down a significant 7.7%. Mr. McGuire is right on. I don’t care who is in office. If any administration uses the EPA (or any arm of government) as a way to thwart economic growth than criticism is merited.
What is the status on grain traffic? Just a few yrs. ago, grain customers were complaining about of lack of capacity, and/or service. Is grain production or demand down? Have RR’s been been able to service then better, due to decreases in other traffic? Too bad you can’t put grain in a coal car, that would solve some problems.
I remember other traffic being a hindrance to grain, especially when North Dakota was on a fracking frenzy. One might reasonably assume that grain is being handled better now thanks to a lack of oil trains in the way.
Grain is moving, but an issue is that it is at about half the price it was just 4 or 5 years ago. The U.S. and several other major producers of corn, beans, and other grains have all had record, or near record production the last two to three years. This means fewer exports, hurting both barge, railroad, and blue-water shipping industries (fewer exports often means lower prices as carriers compete for what is moving). Farmers seemed to have cut and sold asap this year, as storage costs are higher with all of the supply.
Other issues this creates is that grain used for ethanol is impacted by the lower oil prices, as ethanol is now more expensive than oil in many places. Also, with lower grain prices, manufacturers of farm equipment are selling less, even on the export market. There is pressure on fertilizer shipments also, with the lower farm prices.
If you look deep into the numbers, automobiles were up some earlier this year and intermodal has been up, but if it involves manufacturing or energy, volumes are way down. Railroads tend to feel economic changes before most other industries do, so this may not be good. Additionally, the Institute for Supply Management monthly economic numbers are in the recession area - shrinking economy. They have been moving that way for some time now. This is certainly something investors are watching.
Mr Maguire and Mr. Norton,
today’s jobs report: economy adds 292,000 jobs. How is the EPA "thwarting the economy? After all, there is NO environmental protection in China, and there economy is plunging. Plus, they get to breathe coal dust.
What about the impact of crude oil and other raw materials, whose prices are dropping along? Carload traffic is hugely dependent on commodities, and that has nothing to do with the EPA.
I invested a portion of my meager retirement fund in railroads because they are, aside from barges which can’t go everywhere, the most energy efficient means of shipping. I take the long view, and short term variations in RR traffic don’t bother me. Low traffic gives the RRs an opportunity to invest the money they have to increase capacity and speed for the inevitable increase in traffic that will happen in the future. Don’t blame the EPA. Look at lower traffic as an opportunity, not a calamity.
Mr. Cabonetti,
IIRC, it takes 325, 000 jobs created just to keep up with the growth in population. So 292,000 isn’t growth, it’s contraction of the job market.
The railroads often serve as the ‘canary in the coal mine’ for the US economy. So these drops in traffic can mean further bad news in future.