Outlook 2017: Don Alexander, Savage

Generally, we expect the rail industry to face similar headwinds in 2017 that have made 2016 challenging — a slower economy and reduced volumes.

However, there are signs the current downward pressure may not be as stark in the coming year and rail traffic could begin to level out. Sustained, low natural gas prices should promote growth in rail shipments of petrochemicals.

Even so, we don’t anticipate overall growth in the rail industry in the short term. The potential for increased regulation creates additional uncertainty for both railroads and contractors.

These circumstances can produce both challenges and opportunities for companies that provide services for railroads, depending on a variety of factors. In the current environment, railroads are likely to moderate their capital spending and look for ways to become more efficient.

In some cases, they may cut back on contractors and retain the work themselves. Conversely, a contractor may be able to win business if it can demonstrate cost savings or perform the services more efficiently.

At Savage, we value our relationships with the railroads. They are good partners and we’re optimistic about continuing to grow with them in 2017 by considering all aspects of their supply chain and offering solutions that add long-term value.

Larry Laurello, Delta Railroad Construction Inc.
Greg Grissom, Georgetown Rail Equipment Inc.
Bill Dorris, J-Track LLC Central Division
Kevin Riddett, RailWorks Corp.