Rail Earnings Growing Despite Traffic Drop

“Rail pricing remains firm, and railroads grew earnings despite a volume environment that suggests a freight recession,” reports North American equity analyst Morgan Stanley. Rail earnings are less cyclical than other modes, the report continues. The railroads have not posted substantial volume declines in consecutive years post deregulation (1980), point out analysts William Greene and Adam Longson.

Contract renewals are playing a part in the rails’ ability to hold pricing. Legacy contracts coming up for renewal are finding a pricing environment governed by general capacity constraints—which also affect other pricing.

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