The 1st statistics for 2008 show traffic originated by major US railroads (total cars loaded)through week ending Jan. 19 to have increased 5.6% from a 2007 similar time period.
Trailers and containers increased 3.0% over 2007, with containers up 4.1% and trailers down 0.9%.
Source: February 2008 Railway Age
There is no recession. In truth, there has not been a recession since 1982, when we recovered from the disastrous Carter years. We have had periods of slower growth, as we are having today. But no recession. Recession is defined as two consecutive quarters of negative growth. It isn't happening and is not about to happen. Most of the people who complain about "the economy" have never experienced a recession, so they don't know better.
Correction: There actually was a mild recession for eight months in 2001. However over the entire year, the economy showed positive growth.
Well I really don't know what recession in railroad terminlogy means but something must be going on at least with CSX.
I do know that things are moving really slow on the Louisville Division. Part of the reason things are so slow is partly due to the two major Ford plants here in the Louisville area; production for Ford is slow. As it turns out many car buyers are looking towards the most cost efficient vehicle, instead of the big trucks and SUVs, which happens to be what the Ford plants here in Louisville produce.
I beleive the other reason why CSX is runing so slow is because of the election year.
There have be several temporary furloughs on the division 70 people have been furloughed so far. They have also cut several jobs off of the road and yard extra board. Trains have been getting shorter and yard traffic has taken a huge nose dive.
.....You might get by technically saying there is no recession now but I'm sure there are 10's of thousands of workers and businesses that might have a very real different oppinion than the one just posted above....Shocking, the businesses closing in our area currently and just recently.
I believe you will find many of us on here are "old" enough to have seen perhaps a dozen recessions.
Pie in sky we don't have now, for sure.
Quentin
Modelcar wrote: .....You might get by technically saying there is no recession now but I'm sure there are 10's of thousands of workers and businesses that might have a very real different oppinion than the one just posted above....Shocking, the businesses closing in our area currently and just recently.I believe you will find many of us on here are "old" enough to have seen perhaps a dozen recessions.Pie in sky we don't have now, for sure.
I've been part of the work force since 1972, Quentin, and can't ever remember "pie in the sky".
My dad is 86 and he can't remember such a period, either. We both can remember "leaner" times than normal, though.
Different industries are affected in different ways during both Bull and Bear periods. If you live in an agricultural or industrial area, things aren't as good as they were in other time frames. Industrial jobs have been lost due to outsourcing to other states or countries that offer cheaper labor or to automation (robotics). In ag, small farms have become part of larger farms and most of the work is being done by machines. Foreign imports have eaten away at a lot of U.S. jobs. There are a lot of ITs unemployed since the Internet Boom collapsed in the late 1990s, which was inevitable.
Can't complain right now because there are always those who have it worse.
The news media has accurately predicted 32 of the last 2 recessions.
There are 2 critical points that have to be considered here. 1 is the time period under consideration, the other is the tendency to play with semantics. If you work in transportation, there DEFINITELY is a recession. Look at any measure of freight tonnage in 2005 vs 2007 and you'll see steady delcine.
In looking at Jan 07 vs Jan 08 you may see modest growth. The problem is that the actual decline occurred between Jan 06 and Jan 07. Freight tonnage began to drop in early 06 and we've been living with those depressed volumes since. Its kind of like falling off of a cliff, hitting bottom and then a few minutes later saying, well, we haven't fallen any further in the last few minutes. That's what the last year has been.
From 03 to 04 and then again from 04 to 05, RR's were seeing record growth in many commodities including intermodal. They had 3 yrs of growth at 9% annual compounded rates. In 2007 Union Pacific was nearly flat and they benefitted a lot from share-shift based on BNSF decision to exit the NACS container fleet and rail trailers. On the other hand, the intermodal giant, BNSF, was down about 3% (06vs 07).
Compare the Morgan Stanley Freight index for 2004 to 2007. 2004 was the best year in the last 15 for freight demand. 2007 was among the 3 worst.
You're right that things haven't gotten much worse, we were in the basement in 2007 and we're still there in 2008, but we haven't climbed even the first step toward getting out. Until housing gets healthy transportation will suffer and with the announcement yesterday that building permit applications are at a 16 yr low level, I don't see that coming soon. In the meantime, expect to see idle tractors, trailers and strings of box cars, lumber flats, etc parked and idle (or being cut up as is the case w/ CN for much of the last year.) High scrap steel prices combined with low freight demand = busy scrap yards.
CSXrules4eva wrote: Well I really don't know what recession in railroad terminlogy means but something must be going on at least with CSX.
Hi CSXrules,
It's funny, I commute along a 25 mile stretch of a CSX line between Augusta, GA and Greenville, SC. Yesterday I noticed a huge 'convoy' of specialized CSX cars and it looked like they were rebuilding a second track (are these called sidings?) that has been rusting away for years. If they're there today I'll stop and take a couple of pics. Also, I've noticed the traffic volume along this line has increased substantially in the last year or so.
I'm not sure what this has to do with recession, but I thought it was relevant to your post.
Doug
one thing to keep in mind, is that the Rail industry is not monolithic...it aint the same everywhere. With things like the Meridian speedway getting improvements, it is reasonable to believe more traffic would be routed there and away from other places...lots of other seeminly small effects can cause traffice to increase or stay the same on some routes while decreasing on others...and the point about specific ford plants being in a slowdown while others are at normal production can be repeated for numerous industries.
I am just wondering if some of the expansion and improvement plans the RR's have embarked upon are being slowed down or reconsidered in light of the slowing economy...or, are they already so far behind in capacity that they still need to just plain catch up?
....Well I see all the comments and everyone probably witnesses different situations where they are located.
It is rather evident our national economy is grinding to a slow drag and none of us know yet if we are in....have started to enter, or where we are as far as a recession is concerned. When we can look back then we will know.
This area has been heavy in automotive transportation products for decades. Anderson, In. {mostly GM}, produced in excess of 25,000 jobs....GM is almost non existent now in that community.
Here in Muncie....BWA produced over 6,000 jobs at one time....The half mile long plant will close next year. Facilities to be razed. Chevrolet transmission plant located here for decades, now rubble.....Ball Corp....exited. The story continues on and on. Much of the volume of the above jobs is now accomplished for very small wages overseas or Mexico.
Most of the above has been a transitional change at local employees expenses.
Now, and recently....restaurants closing.....some stores in our rather large mall closing.....Auto dealerships, well it goes without saying how all the downturn is effecting those businesses. Scores of new homes unsold as well as preowned units....
Balance of payments situations of exports and imports in our country are draining our resources.
And now a serious downturn of demand of what is left for employment in this country is producing thousands of layoffs. We really don't know yet how deep it will really fall. Of course we'll hope for the turnaround....How soon that happens, we really don't know yet.
I really don't know what we should call it right now, but those out of work probably can find a name for it pretty quick.
Well, I just saw 'an unexpected drop in unemployment rate...' 4.9%
Modelcar,
Actually the US Balance of Trade is getting much better. The cheaper dollar has much to do with it but there are other reasons.
Also, while everyone talks about cheaper labor costs abroad, that's only part of the picture and doesn't normally apply to companies who are manufacturing in the EU. The second major cost consideration that is driving companies to manufacture more abroad is that the US Corporate Income Tax is the highest in the developed world. And US companies aren't taxed on their profits from their foreign plants until they return the funds to the US (which is also the standard practice in most countries that I'm aware of). So it behooves US companies to make the goods abroad which they then sell in the foreign market and then invest much of the foreign profits into increasing production of their plants in the foreign market. Most economists will tell you that drastically cutting the US Corporate Income Tax would go a long way toward helping to curtail US manufacturing jobs going abroad. (In other words, beware of the politician who promises to sock it to business because "they don't pay enough taxes" if you want to keep American jobs.) Of course, manufacturing today is highly automated compared to what it was 30 years ago. Cheap computers and ever developing software, which are also behind the rapid advances in robotics, have totally changed everything.
Joe H. (Milepost S256.0; NS Griffin District)
Pictures: http://anb740.rrpicturearchives.net
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alphas:
Yes, certain months we do see improvements in the US Balance of Trade figures....but as we all know, for years, we've been "bleeding" value going the other way, and it will take "what kind of movements", to even out the excesses for so many years.
There's one other point concerning the trade deficiet that isn't well known. The US does a pretty good job of collecting import data but not with exports. In other words, the amount of US exports tends to be meaningfully under reported, especially exports to Canada. I've been out of the loop on this for a few years due to retirement but my understanding is that while data concerning US exports has improved, there is still a significant amount that gets missed.
....I appreciate what you are saying re: Balance of Trade Payments.
I also understand all the oil and the goods from the far east is a steady stream coming this way that we can't come close to match. Probably have to scrape the bottom with much of the manufacturing facilities ruble now in this country we are just hardly capable of even making enough stuff any more to sell to anyone.
From my yard, things are looking decent. Traffic is acutally up overall, however we suffer no real congestion. Our connections have improved, and dwell time is way down.
From other manifests that do not work the terminal, I have seen that lumber traffic is way down, but chemicals to and from Canada are up. Ethanol of course continues to be the bright spot as well as soy bean meal. I have noticed fewer single cars, but more unit trains. Some changes will take place in the industry, but overall traffic will continue to build in the next year.
There have been no let up on auto traffic, perhaps a shifting of it. I still see the same trains out of Gibson Yard going west, and the usual suspects coming east. Intermodal has been going good of late. Early in the year, ag-chemical traffic was very heavy. I still see a lot of potash moving to terminals from Canada.
Someone purchased a lot of corn of late for Gulf export as trains have all of a sudden started moving in the last two weeks, despite our weather. First batch of grain trains all year.
We will know within a few months whether or not we are in a "recession" when the data comes out. I believe the definition is 2 consecutive quarters of negetive growth. there is some speculation that due to the shifting of the economy from manufacturing to service we may not see a recession again ("it's different this time" usually means that it isnt different this time, only delayed).
Housing is in the crapper. So is the financial markets. Housing caught the flu and passed it along to financial. Too much cheap money earlier in the decade which caused a housing boom. The cornfields turned into cul-de-sac nation and today which do we need more....empty houses or cornfields? We are now facing higher food and energy prices and credit is extremely tight.
There is some speculation that this economy is entering a "perfect storm". Subprime mortages are defaulting at a rapid rate. CDO's (collaterialized debt obligations) which hold those subprimes plus other forms of debt cannot be marked to market and thus cannot be valued, causing massive markdowns on balance sheets. If you dont think that affects you, think again. The credit which you might need will be considerable harder to secure...or your employer might have a very difficult time financing that capital expenditure needed.
The glut in unsold housing means that there will be very little new home construction for awhile (up to 3 years supply of unsold inventory). Thus one of the growth drivers of this decade is sitting on the sidelines. Those massive bank writeoffs for CDO's are forcing the big banks, both investment and retail to scramble for new capital. What if it cant be secured? The next step would be a possible bankruptcy by a BIG BANK. What would that do to the economy? Thus you see Citi and others turning to sovergn equity funds for much needed capital.
The bond insurance companies are on the ropes right now, hoping to separate the munis from the subprimes. If those drop, then the local muni market will all but dry up. The auction debt market right now is seeing no action and the redeeming rates are approaching 20% for certain issues.
I could go on, but it is time for bed.
So...are we in a recession? Personally, I think so, but the numbers will tell the truth in a few months. Panic time? No, but caution should be the rule.
ed
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