Western Railroad Discussion > miles of freight cars parked

AP
Weak Economy Slows Cargo, Idles Railcars
Friday March 28, 1:33 pm ET
By Susan Gallagher, Associated Press Writer
Railcars Stand Idle for Lack of Freight Amid Softening Economy


CRAIG, Mont. (AP) -- BNSF Railway Co., the nation's top hauler of container rail freight, is parking miles of railcars in Montana and elsewhere because there isn't enough freight to keep them rolling. Cars that often carry 40-foot containers of goods shipped from Asia stand like an iron fence between the Missouri River and this Montana burg known for world-class fly fishing. They stretch as far as Sandee Cardinal can see when she stands outside her home on the river's west bank between Helena and Great Falls.

"What is that but a symbol of how America is down in the dumps right now?" Cardinal asked as she gazed at the cars that haven't moved for about three months.

The cars parked are the type that haul cargo from ships on the coast to points inland, mainly imported goods -- an area that's starting to slow down due to the weak economy. Analysts say transportation usually is among the first sectors to show signs of a downturn in the economy and with Americans feeling pinched -- employers eliminated 63,000 jobs last month amid declining consumer confidence -- it could be a while before the idle cars move.

"If you take a look at transportation, both trucking and rail, you will see that things started softening last summer," said Arnold Maltz, associate professor of supply-chain management at Arizona State University. "The reason you are seeing all those cars parked is that the consumer economy translates into slower imports."

Texas-based BNSF Railway, a division of Burlington Northern Santa Fe Corp., has parked upward of 1,000 cars in Montana alone, spokesman Gus Melonas said. More are parked in other parts of the company's 32,000-mile system, which operates in 28 states and two Canadian provinces.

"There's been a downturn in international business and therefore this equipment is not necessary at this point," Melonas said.

The cars standing between Helena and Great Falls constitute 5 percent of the BNSF fleet, Melonas said. He declined to say what percentage of the fleet is parked elsewhere, citing confidentiality issues.

Seasonal car storage is common, he said, but the number of cars now idle is exceptional.

Most of the parked cars are designed for intermodal transportation, when containers filled with imported goods are taken off vessels at U.S. ports and then transported by train, truck or both to distribution centers around the country.

For the first two months of 2008, the volume of intermodal rail freight in the United States was down 3.4 percent compared to the same period last year, according to the Association of American Railroads, an industry group based in Washington, D.C. Last year, intermodal traffic was flat as railroads began to feel the effects of slowing retail orders and the dollar's decline.

While shipments of store-ready consumer goods such as clothing have dipped, movement of coal, grain and ore have risen, according to the association. The latter are less sensitive to swings in the economy and help balance out the bottom line.

Excluding intermodal traffic, rail freight rose 1.7 percent for the first two months of 2008 compared to the same period a year earlier. Coal was out in front last month with 576,012 carloads, or an increase of 5.7 percent.

"The railroads have actually performed relatively well when you look at their entire portfolio," said transportation analyst Todd Fowler of KeyBanc Capital Markets in Cleveland.

For 2007, BNSF Railway's parent company, Burlington Northern Santa Fe Corp., reported about $15.4 billion in total freight revenues, compared to about $14.6 billion the previous year. That growth was carried largely by coal and agricultural segments.

The annual revenue generated from hauling domestic freight was down about 1 percent from 2006, while international traffic was up 2 percent. Meanwhile, coal and agricultural revenue each grew about 12 percent.

Union Pacific Railroad spokesman James Barnes said the Nebraska-based company's intermodal business is "just a little down, but that's not unusual for this time of year." The company's total commodity revenue was $15.5 billion in 2007, compared to about $14.9 billion in 2006. The agricultural segment posted an 8 percent increase over 2006.

Another major rail company, CSX Corp. in Florida, said its car storage is not out of the ordinary. The company's total revenue from surface transportation was up 5 percent, from about $9.6 billion to $10 billion in 2007.

One of the nation's leading trucking companies, Schneider National in Green Bay, Wis., says it believes a freight recession began about 20 months ago, well before signs of a downturn closed in on consumers.

"We have been in a freight recession longer than people have been expressing deep concern about the economy," said Bill Matheson, Schneider's president for intermodal transportation.

Trucking companies are in a unique position. They often compete with railroads for long haul contracts, while also carrying rail freight from the nearest railhead to its final destination.

Schneider is not parking trucks, but neither is it buying new ones to the usual extent, Matheson said.

In Long Beach, Calif., home of the nation's busiest port complex with Los Angeles, the movement of goods has been somewhat stagnant. About 7.3 million containers passed through the Port of Long Beach in 2007, the same as in 2006, port spokesman John Pope said.

"That was a big decline from the growth we'd seen in the past decade or so," Pope said. "Typically, there had been double-digit growth from year to year."

In January, Long Beach posted a decrease of about 12 percent in overall volume compared to January 2007. The situation was less extreme last month, with a 2 percent drop in overall volume compared to a year earlier.

While retailers have imported less goods to be hauled by rail or truck nationwide, exports leaving Long Beach rose as the weak dollar strengthened overseas purchases of U.S. goods, Pope said. Rising export volume -- including grain and wheat shipped by rail -- helped balance falling container imports for most of last year.

"It's a barometer of the economy," Pope said. "We're going to see the ebb and flow that mirrors what happens in the rest of the nation."

There was an article or thread about that sometime recently, those are single-well cars that take 40 foot containers, not in demand at all for some time, and even less so now. NIMBY's all upset about them blocking sitting there blighting their view and their access to some river somewhere.

Hey SD45X - how many miles of BT's sitting on the York Canyon line lately? Any additions???

The economy isn't that weak, in fact the economy is still pretty good when you exclude the burst bubble of the housing market. It's the weak dollar that is causing the slumping imports.

Ted Curphey
Ontario, OR

Yeah, a lot of people hit the panic button once they see signs of bad news and start throwin' in the towel!

ProAmtrak Wrote:
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> Yeah, a lot of people hit the panic button once
> they see signs of bad news and start throwin' in
> the towel!


Pay no attention of course to the actions of the Federal Reserve and the panic they are displaying. A big bank has failed, others are in trouble and Americans are mired in debt. Gold doesn't hit $1000 an ounce because things are good.

The railroads will indeed take a hit unfortunately.

funnelfan Wrote:
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> The economy isn't that weak, in fact the economy
> is still pretty good when you exclude the burst
> bubble of the housing market. It's the weak dollar
> that is causing the slumping imports.

The weak dollar is also propelling coal, wheat, corn, and soybean exports. Also, US steel and chemical exports. Many sectors of the US economy are seeing record sales and profitability.

The weaker dollar makes Canadian lumber imports much more expensive to people paying in US $, though.

Lackawanna484 Wrote:
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> The weak dollar is also propelling coal, wheat,
> corn, and soybean exports. Also, US steel and
> chemical exports. Many sectors of the US economy
> are seeing record sales and profitability.


It's just amazing that with the economy doing so well there are record foreclosures and bailout loans in the hundreds of billions of dollars.

Makes me wonder exactly what is going on. I of course want the railroads to do well but with record fuel prices and Americans in trouble financially there must be some fallout ahead.

Wish I had you all's optimism! Most of us are two paychecks away from bankruptcy.

Some people believe what their President says..

Times are a changing......

www.youtube.com/watch?v=WSuERWDDxlM&NR=1

I just saw a example of parked cars when i was in Reno the other day. A few miles of lumber cars parked on the Reno Branch. What a sight. I also saw a whole bunch of box cars parked in WA state on a shortline. They have been there so long the graffiti artists have repainted almost every car

Also. Inflation isn't all that bad. As long as you remove food and energy costs from the equation. Again, poster above not looking at the bigger picture. Things might not be so bad *IF* it was tied *JUST* to housing. It's too bad that housing has been pretty much the only thing propping up the economy for the last decade or so. So when (not if, but when) housing REALLY collapses (so far all we've seen is the preview), it will take the rest of the economy with it. After all, that's a huge part of the problem: people using housing to create an artificial economy fueled by "funny money" to live lifestyles they otherwise wouldn't have been able to afford. That's where all of the boats, SUV's, Hi-Def flatscreen TV's, and granite counter tops were purchased. NOT because of a "healthy" economy.

Yeah really, who needs food and energy anyway?! No impact at all on the average consumer, noooooo.

Des-Lab Wrote:
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> Inflation isn't all that bad. As long as you
> remove food and energy costs from the equation.

As long as we feed corn to our cars, the price of food will continue to rise. It takes 3/4 of a gallon of oil to make a gallon of ethanol. Oh, and by agreement with the feds, ONLY corn can be used, rather than sugar cane, as in Brazil. It's a rigged deal.

PumpkinHogger Wrote:
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> Yeah really, who needs food and energy anyway?! No
> impact at all on the average consumer, noooooo.
>
> Des-Lab Wrote:
> --------------------------------------------------
> -----
> > Inflation isn't all that bad. As long as you
> > remove food and energy costs from the equation.

Many economists informally add back the impact of energy (heating + transport) and food when they calculate net household disposable income changes. These two important elements have been outside the calc since the 1970s.

With food and energy added back, the inflation rate annualizes at 7% to 9%, depending on where you live.

I think in addition to the housing industry, the "Funny Money" is in the toilet as well, with the wacko money grubbers supported by the Bush administration taking the money and running. And it just now is starting to show how bad things really are. Yeah, lets take Fed funds and bail 'em out!

Butch