As the economy goes, so go the railroads. Or is it the other way around? Either way, both seem to be heading in the right direction, at least according to railroad executives, Web site www.purchasing.com reports.
"I'm not willing to say the challenges are over, but some areas are pretty strong," said Union Pacific CEO Jim Young in an interview with the Associated Press. UP's automotive shipments are up 60 percent from a year ago and shipments of industrial products are up about 4 percent compared with last year.
Speaking at the JPMorgan Aviation, Transportation and Defense Conference, Oscar Munoz, CSX's CFO, said he expects double-digit growth for 2010 driven by higher sales and shipping volumes.
At the same conference, Kansas City Southern's CFO Michael Upchurch said shipping volume is up 13 percent through the first eight weeks of this year.
U.S. intermodal volumes as reported by the Association of American Railroads increased nearly 14 percent year-over-year during February.
Some Wall Street analysts expect railroads' pricing power to firm up this year. In a recent note on Norfolk Southern, Barclays Capital analyst Gary Chase said the pace of price increases has slowed, but he thinks that should ramp back up in the second quarter.
(The preceding article by David Hannon appeared on the Web site www.purchasing.com on April 8, 2010.)