Weekly Traffic of Major U.S. Railroads For The Week Ending May 9, 2009. (PDF)
http://www.aar.org/NewsAndEvents/PressReleases/2009/05_WTR/051409_Traffic.aspx
I here that thr railroads are using this time as a breather to expand there infastructure to accomadate the resurgance in traffic (hopefully) after the recession.
And its only going to get worse. Best projections is atleast anothr yr before traffic increases to a strong degree. BNSF is in the process of storing 100 coal train sets. With that business down, thats scary. Not many high cost capital improvements are active now and will remain so until this thing boils over. What is not good is the fact with so many surplus engs stored up, this would be a perfect time to sideline some of the older eng fleet and rebuild them for atleast anothr 10-15 yrs of service. This isnot being done. I’m mainly getting at four axle power used on locals/yd service.Most of these units are just plain junk to work with. The youngest of the fleet is the 20 yr old GP60’s and their 1990 built GP60M cousins. With most of these downgraded to local/yd service, they need a visit to the grease monkey.
Not so. Capital spending on new capacity has virtually ceased. However, capital spending on track, bridges, tunnels, signaling, and PTC is continuing at almost the same pace as last year. Bridge work is actually at a higher level in some cases, because it is so much more efficient to do when traffic levels are down, compared to track.
RWM
Why? Is coal business down that much?
I’ve been seen a lot of locomotives in storage. Are the R.R. doing engine or up-grades before the store them away?
Towards the end of a “normal” recession, sale (and all other things being equal, rail haulage) of housing materials would turn up shortly before the overall economy or unemployment rate looks up. That’s because developers want the material on hand if they are about to hire or rehire employees.
This seems to be the “all other things not exactly equal” recession. The problem this time seems to be (a) an excess of housing, especially large-floorplan housing in new suburban developments (or if not exactly an excess of housing stock, then a shortage of people who can afford same until housing units get cheap enough and money gets liquid enough); and (b) to some extent, the large amount of platted but not built, partly built but nowhere near saleable housing stock. Situation (b) might be the more common of the two; those of us who remember Carter-era “stagflation” remembers those pictures of abandoned highrise condos, shells only, on the Florida West Coast. That, too, will shake out eventually, especially if banks can offer retail mortgages that are not seriously overpriced compared to the “wholesale” price they will pay for money, a process that originates with the Fed.
Would that the railfan could have Superman’s x-ray vision for those shipping cubes! Maybe in there are already the rollls of vinyl flooring, the flagstone walks and siding, the major appliances (fridge, oven, dishwasher) that need to be installed in those as-yet-unfinished houses. So it’s at least possible that we won’t be able to see impending evidence of a recovery, not until timber and plywood and such visibly ride the rails, and by that time, people may already be talking about things looking up. OTOH a rise in the number of stacks shipped may mean that autos have rebounded and auto parts are necessary to build new cars – or it may be something else entirelty – making th
“These jobs are going boys, and they ain’t commin’ back.”
It wouldn’t make sense for a railroad to put money into a locomotive that was going into storage beyond what was required to preserve it because they don’t know when, or if, the locomotive will ever be used again. If they spent money like that they could well be investing in upgrading a piece of scrap.
Given the present tragectory we’re either going to stay like this or have hyper-inflation.
Interesting occurances in the financial markets these days…
-
The recent run up in the stock market tends to tell us the recession will end by end of the year, if one believes the stock market forecasts the future by 6-9 months. Or could it be a considerable amount of $$$ moved for no-yielding (or even negetive yielding) treasuries into equities once it was determined there was going to be massive amounts of new treasury debt issued? Where else was the money to go?
-
Housing inventory is beginning to move, somewhat slowly, but at least it is moving. Also the housing industry equities such as Pulte have really jumped. But, there is still enormous numbers of foreclosed houses and the next wave will be beginning later this years with ALT A type mortgages starting to reset…with values now 25-40% below balloon payouts.
-
Price-Shiller indicates, when compared to historical housing trends that we have another 10-20% drop in housing values to find support in the long term trend. Take a look at current housing prices vs long term trends of housing (long term meaning 100 years) and you will note the dramatic rising in this decade and the over the cliff drop the past three years. There is still aways to go. The American consumer has used their house as an ATM to finance everything from vacations to cars to flat screens. Home equity lines of credit are now being reigned in, as are credit card (American Express has been offering card holders $300 gift cards to go away).
-
Further, Americans have very quickly gone from having a negetive savings rate…see #3 above to now savings around 5%. This is good in that we need to save (and invest) as a society, but it also is less $$$ that is buying consumer goods, etc. One could say there not only was a housing bubble, but also a consumer buying bubble. Yesterday
Well, by infastructure I ment bridges, track repair etc. Sorry for not making that clear.
I have read that railroads do use this time to try to repair things,but I would also guess that they have less resources to spend on this, so saving up might be good too. I do hope that traffic comes back soon, it would not only be good for the railroads but a good sign of the economy taking a turn for the better.
Just stayed 24 hours along UP’s Triple Track in Nebraska… saw 105 trains, only 54 coal trains. Last year I saw nearly 80 coal trains, and had a grand total of 137 trains. 20+ coal trains gone! Though I know much of that is from lost contracts to BNSF.
For instance - posted yesterday (May 18, 2009) is an article entitled: “BNSF, UP to Upgrade Lines in 3 States” at:
http://www.progressiverailroading.com/news/article.asp?id=20429
This article mentions 2 BNSF projects totalling $26 million, but that works out to only about 1.3 % of what the same article says is BNSF’s total infrastructure spending this year of about $2 billion.
Similarly, the UP project is $36 million of $1.7 billion systemwide to improve tracks this year, all per the same article - that’s about 2.1 %.
EDIT: Aside from being small pieces of the big budgets, note that these projects are merely heavy maintenance in nature - ties, rail, crossings, ballast, etc. = replacing what was already there, not capacity increases.
- Paul North.
Here’s my perspective (I Live 1/4 mi east of MP 227 on the BNSF Emporia Sub).
As commented by others, BNSF has been doing much maint around here, on Track and Ties. So the majority of traffic in both directions is really heavy at night; A practice called “Fleeting”. Since this area is double tracked, and the crossing at K-55 is a short distance away, we are an area where a lot of passing takes place, at track speeds during the night; So this activity is done to the accompaniment of a heck of alot of ‘horn music’.
Currently a mechamized tie gang is working south/west (?) from the Rose Hill area, and will probably be thru here this week, so traffic goes slow, as expected, but there is still a steady flow of container and grain’worms’ in both directions. Herzog has also had a coulpe of their ultra sound trucks working in this are, both on the Ark City Sub and on the Emporia Sub, as well.
I have noty been able to count trains, but I’m told it is not as heavy as it has been, but there is till a lot of tonnage moving around here. Just my impressions[2c]
After the first of July, there may even be a few less coal trains. The talk is we may lose 2 or 3 more coal contracts then.
The UP has added a place on the employees web site for us to notify them of any possible business leads. I’ve a few suggestions for them, most of which have just remodeled their facilities and removed the last vestiges of rail service because the UP or CNW before them ran the business off.
Jeff
With so many businesses either reducing operations or shutting down totally, this reduces the demand for electricity and thus a less demand to produce and transport coal. Again, not a good thing to deal with.
Does the R.R. take the time to overhaul their locomotives when the economy is slow?
No, but they should.