US Rail Traffic Returning to Normal

16 Apr 2014

rail, logistics

Bill Mongelluzzo | - U.S. rail traffic is returning to normal after one of the coldest winters in recent memory, Bradley Thrasher, vice president and general manager of industrial products at the Union Pacific Railroad, told the Los Angeles Transportation Club April 15.

Home building, conversion of highway freight to rail, energy extraction and international trade will be the main drivers of freight volume for the remainder of the year. Manufacturing should also contribute to the growth.

Economists at the beginning of the year were confidently predicting a return to more normal growth as the recovery entered its fifth year. However, the economy, including the freight sector, was set back by months of relentless cold weather and snow in the eastern half of the nation.

Weather in the East affected rail traffic throughout the country. Intermodal trains were thrown off schedule, causing equipment shortages and cargo delays at ports on both coasts. Railroads could not build full trains, maintenance and repair work on tracks was interrupted and train velocities slowed as outside activities in some regions were curtailed by below-zero temperatures.

Now that spring weather has arrived and the system is once again fluid, railroads will be able to satisfy pent-up demand for consumer and industrial products, Thrasher said. The housing industry, which expanded by 20 percent last year, is back on a growth track, and that will translate to more freight. About 8 percent of UP’s shipments are tied to housing, he noted.

Railroads continue to attract freight from the highways. Last year was the fifth consecutive year of growth in freight conversion from highways, with growth in that sector totaling 36 percent from 2008 to 2013, he said.

Rapid expansion in oil and natural gas extraction in shale plays is contributing to growth in rail freight volume in several ways. Railroads are carrying large volumes of frac sand and pipe to the oil fields, while outbound movement of energy products is increasing. Companies that manufacture pipe for the oil industry have announced intentions to build 11 new plants, Thrasher said.

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