By DESIREE J. HANFORD Dow Jones Newswires
CHICAGO — (AP) Railroad executives are expecting record shipping volume this fall, but are optimistic that the freight will move smoothly. The holiday shopping season doesn't start for another two months, but the shippers typically see an increase in freight beginning in September. That's when Asian exporters put items ranging from clothes to toys into containers destined for the United States.The arrival of those imports often coincides with the fall harvest for some crops, putting further strain on the system.
The railroad industry had its busiest week in history for intermodal freight _ goods that are in trailers or shipping containers _ when it moved 251,000 trailers and containers the last week of July, Association of American Railroads spokesman Tom White said.
"And if history tells us anything, it will get busier as we get into October," he said. "We're definitely seeing an increase but things are moving through fine. It may not come without any problems, but there aren't any choke points or log jams or anything like that."
As it has for the last few years, the Surface Transportation Board in late June requested that railroads detail their plans for the peak shipping season. The STB began requesting the information after the industry encountered congestion problems in 2003, brought about by factors that included inaccurate freight volume estimates.
The STB resolves railroad rate and service disputes and reviews proposed railroad mergers.
Executives from Union Pacific Corp., Burlington Northern Santa Fe Corp., CSX Corp., Norfolk Southern Corp. and others told the STB in mid-July that they expect freight volume to remain strong for the remainder of the year and that congestion shouldn't be an issue. Many of the companies reiterated their outlooks in their second-quarter conference calls later in the month.
Burlington Northern Santa Fe Chairman, President and Chief Executive Matthew Rose estimated last month during an earnings conference call that third-quarter revenue will increase 17 percent to 18 percent from the year-earlier period. Half of the increase is expected to come from volume.
Union Pacific President and Chief Executive Jim Young said in a July 17 letter to the STB that traffic volume during the first half of the year rose 5 percent compared with the year-earlier period, and that all indications are that the demand "will continue at a record pace" for the remainder of the year.
Union Pacific's domestic freight volume should increase 2 percent to 4 percent during this year's peak season compared with last year, Brian McDonald, vice president of intermodal marketing and sales for Union Pacific, told Dow Jones Newswires.
Freight volume at CSX is running nearly 4 percent greater year-to-date and in the third quarter compared with year-earlier periods, spokesman Garrick Francis said. The company has added employees, equipment and track capacity to deal with increase in freight volume, he said.
"Given the investments we've made, the projects we've done and those we'll do the rest this year, along with the assets and new hires, we feel pretty good that operations will continue to run pretty smoothly," Garrick said.
CSX Chairman, President and Chief Executive Michael Ward told the STB in his July 14 letter that several factors have combined for strong demand in nearly all markets, including increases in imported products, rising fuel prices and a shortage of truck drivers.
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