Intermodal Volumes High, Speeds Slow

Jan. 26, 2005
Average network speed across North American railroads declined 8.9% in the second week of 2005 (through Jan. 14) when compared with the same period in 2004. Terminal dwell time also deteriorated 9.7%

Average network speed across North American railroads declined 8.9% in the second week of 2005 (through Jan. 14) when compared with the same period in 2004. Terminal dwell time also deteriorated 9.7%.

Weather problems shifted from CSX recovering from a devastating hurricane season to Union Pacific (UP) battling storm damage in southern California. The current figures reflected only three days of storm damage for the UP and had not yet caught up to the heavy snows and bitter cold that plagued the upper Midwest and Northeast.

One bright note was that Canadian railroads reported improved average network speed – up 0.4% for the Canadian National (CN) and 4.1% for the Canadian Pacific (CP).

CSX showed six consecutive weeks of stable-to-improving average train speeds during November and into mid-December, but average train speed dropped steeply in the last two weeks of 2004.

Carload volumes decreased 2.4% in the second week while intermodal traffic continued strong, up 7% year-over-year in the same period.

Meanwhile the truckload sector, U.S. sales of Class 8 trucks rose 44.5% in December 2004, topping 200,000 for the full year. Orders hit an all time high in 2004 of 385,000, says equity research firm Morgan Stanley. Production for 2005 is projected at 300,000 to 320,000 units, but many manufacturers report production targets above that number – with 2006 looking even bigger.

Much of the momentum in truck buying is the result of new emissions rules that go into effect in 2007. Trucks that meet those requirements will be more expensive and less efficient, prompting many carriers to replace and expand tractor fleets ahead of the requirement.

Truckload fundamentals remain strong, says Morgan Stanley, even with the overheated market of 2004 beginning to cool.

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