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3/6/2015



Rail News: Rail Industry Trends

Moody's report: Rail volume will benefit from broad-based demand despite crude crunch


A slowdown in crude-by-rail shipments caused by lower oil prices won't impact overall freight-rail volumes enough to change the North American rail industry outlook from positive, according to Moody’s Investors Service.

Petroleum-related shipments would likely have to contract by about 15 percent for the company to change its outlook to stable, assuming other unlikely expectations are met, Moody's officials said in a press release.

In a new report titled "Freight Growth Resilient Despite Slowing Crude Oil Shipments," the company says the forecast for petroleum product shipments will only have a modest impact on total carload growth.

"The sector continues to benefit from broad-based demand for most other freight categories, reflecting steady improvements in the U.S. economy," said Moody’s Vice President and Senior Analyst Rene Lipsch. "However, our forecast for coal shipments, the sector's largest freight commodity, is subject to a potential downside risk due to the current low natural gas prices and the U.S. EPA’s mercury and air toxics standards."
 
Petroleum and associated products comprise about 6 percent of total U.S. carloads. The revised forecast of mid- to single-digit volume growth for petroleum products and crushed stone, sand and gravel shipments would lower total freight volume growth in 2015 to about 3.2 percent versus 3.5 percent in Moody's previous forecast.



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