Cargo Business Newswire

Thursday, November 5, 2015

Rail freight drops as industrial economy weakens

Freight carried by major U.S. railroads fell by 7 percent in the second quarter of 2015 compared with the same period in 2014, confirming that large parts of the industrial economy are in recession.

The major Class 1 railroads carried 431 billion ton-miles of freight in the three months ending June, down from 463 billion ton-miles in 2014, according to the U.S. Surface Transportation Board.

Changes in freight volumes reflect broader difficulties in the industrial economy.

Rail operators have been struck by a perfect storm that has hit both their traditional and new business lines. Coal shipments to power plants, the biggest commodity on the network, have been hit by a

combination of environmental regulations and low gas prices. Second quarter coal shipments were down by 27 million tons, or around 15 percent, year-over-year.

Petroleum shipments, one of the fastest growing sources of new business during the oil boom, fell more than 650,000 tons, or 5 percent, as production began to peak and new pipelines diverted crude from the rails.

And shipments of sand and gravel, a key ingredient in fracking, plunged by more than 2 million tons, nearly 14 percent, as the number of new wells drilled and fracked tumble.

For more of the Reuters story: www.reuters.com