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Home / News & Reviews / News Wire / Grain, auto, frac sand traffic are concerns for 2019 traffic outlook NEWSWIRE

Grain, auto, frac sand traffic are concerns for 2019 traffic outlook NEWSWIRE

By Bill Stephens | January 31, 2019

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UPIowaWrinn
UPIowaWrinn
UP forecasts single-digit growth in 2019. This westbound mixed freight is in eastern Iowa.
Trains: Jim Wrinn
Executives from the six publicly traded Class I railroads expect 2019 to be another solid year for traffic and revenue growth amid a relatively strong economy.

In most cases, the railroads expect this year to be a replay of 2018, when traffic was up 4 percent at five of the big six Class I systems. The lone outlier last year was CSX Transportation, which grew 1.5 percent, with the slower growth largely due to the trimming of its intermodal network in late 2017.

In the East, CSX expects volume and revenue growth in merchandise, coal, and intermodal segments this year. Overall, the railroad expects low single-digit revenue growth in 2019. CSX did not provide detailed volume guidance. But CEO Jim Foote said traffic growth should continue this year.

“Over the past few days, I have spoken to a number of large customers across different industries. General customer feedback has been positive and it’s consistent with the demand levels we are seeing today,” Foote said on the railroad’s Jan. 16 earnings call. “While it’s hard to ignore the volatility in equity markets, I cannot call out any trend in our business today that would point to a significant slowdown in our business.”

Norfolk Southern has not yet released its outlook for 2019 because it has an investor day scheduled for Feb. 11. But Chief Marketing Officer Alan Shaw told investors and analysts on the railroad’s Jan. 24 earnings call that freight demand remains strong for intermodal traffic and export coal and that he’s excited about growth prospects for this year.

In the West, Union Pacific’s sentiments echoed those of CSX.

UP CEO Lance Fritz noted economic slowdowns in China and Europe, as well as ongoing potential negative impacts of trade disputes and increased tariffs. “Having said that, we have touched base with our customers and continue to do so. And as we look at the economic indicators in the United States, we still see support for what we consider low single-digit volume growth. And we’re poised to be agile if that doesn’t happen, but it feels like the U.S. continues to plug along,” Fritz said on the railroad’s Jan. 24 earnings call.

UP expects continued growth in intermodal, plastics, chemicals and other industrial products, auto parts, as well as food and refrigerated business.

There’s uncertainty in grain exports due to Chinese tariffs, Kenny Rocker, UP’s executive vice president of marketing and sales, says, and North American auto production is projected to fall slightly. Hydraulic fracturing sand volumes — which fell 47 percent in the fourth quarter — will remain off as local sand near Texas drilling locations displaces rail-hauled sand from Midwestern mines.

In Canada, Canadian Pacific expects volume growth in the mid- single-digit range based on revenue ton-miles. Chief Marketing Officer John Brooks says CP anticipates another particularly strong year for Canadian grain, energy, chemicals and plastics traffic, forest products, and intermodal.

Canadian National, long the fastest-growing of the big systems, forecasts slightly higher revenue ton-mile growth in the high single-digit range this year. Commodities showing strength include export coal, Canadian grain, crude oil, and international intermodal traffic.

Kansas City Southern, the smallest of the Class I systems, predicts volume growth of 3 to 4 percent this year, led by its Mexico cross-border traffic. KCS executives have a favorable outlook for 65 percent of the railroad’s traffic, including chemical and petroleum, automotive, and intermodal. They expect flat volume for 35 percent of traffic, including industrial and consumer, agriculture and minerals, and energy shipments.

BNSF Railway, a unit of Berkshire Hathaway, is scheduled to release its financial results alongside its parent company next month.

3 thoughts on “Grain, auto, frac sand traffic are concerns for 2019 traffic outlook NEWSWIRE

  1. “The lone outlier last year was CSX Transportation, which grew 1.5 percent, with the slower growth largely due to the trimming of its intermodal network in late 2017.” Thats being overly kind to CSX.

  2. You can thank Trump for the rail traffic decline. His uneducated, undisciplined coupled with his ignorance of domestic and foreign policies will destroy this county. He works for Putin.

  3. Mr. Flaherty don’t know what youre smokin but what I read was all positive from the article on the class one railroads , and as far as President Trump he is the best thing that has happened to this country for the economy and for businesses .

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