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October 2009
Talk of languishing rail-traffic volumes wasn't exactly bouncing off the walls of the familiar Chicago Hilton & Towers Hotel during two of the industry's largest annual conferences and exhibits last month — the Railway Supply Institute's Global Railway Tech 2009 (Sept. 16-18) and the American Railway Engineering and Maintenance-of-Way Association's Annual Conference & Exposition (Sept. 20-23). But the consequences of a continued traffic lag came through loud and clear with every "Do you think railroads' capex budgets are going to be even lower next year?" question that we heard (and there were a lot of them) in the technical sessions and trade-show aisles during that seven-day Windy City stretch.
A potential ray of sunshine in the still-murky looking glass with respect to the 2010 rail outlook? U.S. grain volumes, from soybeans to corn to ethanol to distillers' dried grains, could be on the cusp of picking up, big time, as Managing Editor Jeff Stagl reports in this month's cover story. That there's he said/she said talk among railroads and grain shippers about rates, as well as conversation about what it would take for both to become better business partners, also bodes at least a little bit well — if only because there's less talk of lagging business.
One rosy prognostication for one commodity group does not a "hard times are over" summation make; we're taking the grain of optimism with a grain of salt. And even if rail traffic volumes begin to pick up, it doesn't mean Class Is' 2010 capex budgets will increase accordingly. But in the interest of a greater, granular good: The grain forecast and corresponding traffic uptick are potential (and welcome) harbingers of better things to come.
Seeing silver linings in this economy sometimes requires a little digging, data-wise. For example: In July, major U.S. ports handled 1.1 million 20-foot equivalent units (TEUs), up 8 percent from June's level but down 17 percent from July 2008's volume — the 25th-straight month to register a year-over-year decline, according to the National Retail Federation's (NRF) and IHS Global Insight's September "Port Tracker" report.
The forecasters estimated August port volume at 1.13 million TEUs, which would represent a 17 percent decline from August 2008's level, according to the report, which is based on a survey of 10 major ports. Port Tracker also projected volume to fall 18 percent in September to 1.11 million TEUs; 17 percent in October to 1.14 million TEUs; 13 percent in November to 1.07 million TEUs; and 2 percent in December to 1.04 million TEUs. For the year, Port Tracker projects port volume to total 12.5 million TEUs, a 17.7 percent drop from 2008's level and the lowest annual volume since 2003, but a slight increase from the 12.3 million TEUs forecasted a month ago. The forecasters revised the projection to reflect an expected import uptick "as retailers anticipate that economic conditions will begin to ease."
"We're starting to see a pattern where import levels are still below last year, but they're not as far below as they were just a few months ago," said NRF Vice President for Supply Chain and Customs Policy Jonathan Gold. "This matches up with other economic indicators that show the recession may be coming to an end."
On Sept. 25, the OneRail Coalition sent a letter to Senate Committee on Appropriation's Transportation and Housing and Urban Development Subcommittee Chair Patty Murray (D-Wash.) urging that "maximum amounts be made available" for railroad investment in the FY2010 Transportation, Housing and Urban Development Appropriations bill (H.R. 3288). OneRail comprises the Association of American Railroads, American Public Transportation Association, American Short Line & Regional Railroad Association, National Association of Railroad Passengers, Amtrak, National Railroad Construction & Maintenance Association, Natural Resources Defense Council, Railway Supply Institute, States for Passenger Rail Coalition, Surface Transportation Policy Partnership and United Transportation Union.
Meanwhile, AAR sent a letter of its own, urging Appropriations conferees to continue supporting a number of H.R. 3288 provisions, including the Projects of National Significance Program, rail safety technology grants, and high-speed and intercity passenger-rail grants.
"Investments in the nation's freight and passenger rail infrastructure offer not only significant environmental, energy and mobility benefits, but will maintain and create outstanding jobs for American workers and improved livability for our nation's communities," wrote AAR President and CEO Ed Hamberger.
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