Industry Trends from Progressive Railroading February 2010

U.S. traffic to 'accelerate'

Although U.S. railroads' carloadings plummeted to a 21-year low in 2009, a slight economic upswing at year's end suggests rail traffic will post a modest gain in 2010, industry observers believe. Carloads tumbled 16.1 percent vs. 2008 to 13.8 million units — the lowest level since 1988, according to the Association of American Railroads (AAR). Intermodal traffic fared only slightly better, dropping 14.1 percent to 9.9 million units, the lowest volume since 2002. But in December, carloads fell only 4.1 percent and intermodal volume rose 2.5 percent. "We're seeing signs that the economy is improving," said AAR Senior Vice President of Policy and Economics John Gray in a prepared statement. Transportation forecasting firm FTR Associates agrees. In its January "Rails Ahead" newsletter, the firm raised its 2010 projection for rail carloads to a 4.6 percent year-over-year gain. "We expect to see comparisons turn modestly positive in the first quarter, then accelerate later in the year," said FTR President Eric Starks.

L.A. ports pump up volume

December was the best month by far for the Port of Los Angeles last year. Volume increased 0.4 percent to 562,990 20-foot equivalent units (TEUs) compared with December 2008's total — the port's only monthly gain in '09. Export containers jumped 40.2 percent to 153,836 TEUs, "fueling more speculation that international container trade will start to recover in 2010," port officials said in a prepared statement. Total '09 volume decreased 14 percent primarily because of the global recession and weak consumer spending, port officials said. In December, the Port of Long Beach, Calif., handled 232,586 imported TEUs, up more than 13 percent, and 123,084 exported TEUs, up more than 30 percent — the port's first monthly cargo gains in two years. The port's '09 volume dropped 22 percent to 5.1 million TEUs, the lowest annual total since 2003.

Corn to fuel grain carloads

U.S. railroads received some good news from the U.S. Department of Agriculture (USDA) last month. The agency expected the nation's 2010 corn production to reach a record 13.2 billion bushels, which would represent a 1 percent increase from the previous record of 13 billion bushels set in 2007. In December, the USDA forecasted annual corn production of 12.9 billion bushels. The agency still projected annual corn exports to total 2.1 billion bushels. The continued use of "scientifically proven" biotechnology applications will help increase corn yields, underscoring the need to keep developing markets for U.S. coarse grains, U.S. Grains Council officials said in a prepared statement. The USDA also projected annual sorghum production at 383 million bushels, 19 million bushels higher than the department's 2010 forecast released in December. The projection for exports remained unchanged at 140 million bushels.