Get documents about "No Slide Title
Document Sample
It’s all about the Economy!
July 15, 2009
Overview of U.S. Freight RRs in 2007
Freight
Type of Miles Revenue
Railroad Number Operated* Employees ($ billions)
Class I 7 94,801 167,581 $50.3
Non-Class I 552 45,128 19,376 3.7
Regional 33 16,713 7,742 1.7
Local Linehaul 323 21,960 5,449 1.2
S&T 196 6,455 6,185 0.8
Canadian ** 2 561 n/a n/a
Total 561 140,490 186,957 $54.0
*Excludes trackage rights. **Includes CN and CP operations that are not part of
a CN- or CP-owned Class I carrier. Source: AAR
The Rail Industry’s Big Issues - 2009
Preserving a balanced regulatory
structure
Climate change – Impacts and
Opportunities
Development and installation of
working positive train control
High speed rail – challenges and
opportunities
Moving highly hazardous materials
THE ECONOMY!!
There’s a Close Relationship
Between Economic Growth & RR Traffic
RR Traffic vs. Real GDP
$12 1.9
Real GDP (trillions of 2000$)
Trillions of Ton-Miles
$11 1.7
RR traffic
(right axis)
$10 1.5
Real GDP
$9 (left axis) 1.3
$8 1.1
'99 '00 '01 '02 '03 '04 '05 '06 '07 '08
Source: BEA, AAR
Lumber & Wood
$1.7 bil.
Everything
Else Pulp & Paper
$6.7 bil. $2.2 bil.
Intermodal Steel & Other
$12.3 bil. Metal Products
$2.6 bil.
Autos
$3.6 bil.
Coal Food
$14.2 bil. $4.6 bil. Diverse
Farm
Prod. Traffic
$5.4 bil.
Chemicals
$7.7 bil.
Base
*Data show Class I revenue in 2008 Source: AAR
Beginning Around 2003, Various
Forces Pushed Freight to Rail
8%
GDP Growth
6%
4%
2%
0%
-2%
That Meant More Rail Traffic
(billions of tons)
2.0
1.9
1.8
1.7
1.6
Up 12.6%
1.5
1.4
'99 '00 '01 '02 '03 '04 '05 '06 '07 '08
Source: AAR
That Resulted in Tighter Capacity
20
19
Revenue Ton-Miles / Mile
18
17
(millions)
16
15
14
Up 30.5%
13
12
1999
2002
2005
2008
Source – AAR, R-1 Reports
Plus, After Falling for 25 Years,
Average Rail Rates* Began to Rise
10%
8%
6% First meaningful
4% increases since
2% before 1980!
0%
-2%
-4%
-6%
'99 '00 '01 '02 '03 '04 '05 '06 '07 '08
*Inflation-adjusted average revenue per ton-mile Source: AAR
More Traffic x Higher Rates
= Higher Revenue
$65
$60
$55 68% increase
$50 from 2003-2008!
$ billions
$45
$40
$35
$30
$25
$20
'99 '00 '01 '02 '03 '04 '05 '06 '07 '08
Source: AAR
And, They Re-Invested More Than Ever
Before Back Into Their Systems
(Net Income) RR Spending Per Mile
$9
$8 $250,000
$7 $225,000
$6
$ billions
$200,000
$5
$4 $175,000
$3 $150,000
$2
$1 $125,000
$0 $100,000
'99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08
Source: AAR
Railroads Spend More Than Most
State Highway Agencies!
1. Texas $10.96
Class I Railroad Spending* 2. Florida $6.09
on Infrastructure 3. California $5.43
vs. Union Pacific $4.16
State Highway Agency BNSF $4.05
Spending* - 2007 4. New York $3.88
5. Pennsylvania $3.79
($ billions) 6. Illinois $3.51
7. Michigan $2.65
8. North Carolina $2.52
*Data include capital outlays and CSX $2.49
maintenance expenses. 9. Georgia $2.30
10. Ohio $2.25
Sources: FHWA Highway
Statistics Table SF-12, AAR 11. New Jersey $2.08
Norfolk Southern $2.07
12. Virginia $1.90
But Then -
Two Things to Remember
Railroads are a “derived demand” industry
GDP = C + I + G + (X-M)
Where C = consumption 70%
I = investment 16%
G = government 19%
(X-M) = exports – imports - 5%
A Lot Fewer People Are Working -
400 10%
300 June 2009 Unemployment = 9.5%
200 9%
100
0 8%
-100 7%
-200
-300 6%
-400
-500 5%
-600 2005-2007: +5.8 million jobs
-700 2008-2009: -6.5 million jobs 4%
-800 3%
2005 2006 2007 2008 '09 2005 2006 2007 2008 '09
And They Are Buying a Lot Less
120 Consumer Confidence At Record Low $390
110 $380 Retail Sales:
100 $370 2005-2007: +13.1%
90 2008: -10.6%
$360
80 $350
70
$340
60
$330
50
40 $320
30 $310
20 $300
2005 2006 2007 2008 '09 2005 2006 2007 2008 '09
Rail Intermodal is Focused on
Consumer Goods – Much of it for Big
Box and Other Retailers
U.S. Rail Intermodal Traffic
(Average Weekly Trailers and Containers Originated)
260,000
250,000
240,000 2006
230,000
220,000 2007
210,000
200,000 2008
190,000 2009
180,000
170,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Excludes U.S. operations of CN and CP. Source: AAR Weekly Railroad Traffic
U.S. Housing Starts vs. Rail Carloads
of Lumber and Wood Products
(Index Jan. 2005 = 100)
150
125
100
75
50
Housing Starts
25 RR Carloads
0
2005 2006 2007 2008 '09
Source: Census Bureau, AAR
U.S. Auto Sales vs. Rail Carloads
of Autos and Auto Parts
(Index Jan. 2005 = 100)
130
120
110
100
90
80
70
60
Auto Sales
50
RR Carloads
40
30
2005 2006 2007 2008 '09
*Passenger cars, SUVs, minivans, and pickups. Vehicle sales are seasonally-adjusted annualized
selling rate. **RR carloads are unadjusted, 3-month moving averages. Source: AAR, BEA
U.S. Dollar Exchange Rate*
(1985 = 100)
104
102
100
98
96
94
92
90
88
= dollar is getting stronger
86 = dollar is getting weaker
84
82
80
2005 2006 2007 2008 '09
*Weighted average against the currencies of a broad group of major U.S. trading partners.
Source: U.S. Federal Reserve
U.S. Rail Grain Traffic
(Average Weekly Carloads Originated)
28,000
26,000
24,000 2006
22,000
20,000 2008
2007
18,000 2009
16,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Excludes U.S. operations of CN and CP. Source: AAR Weekly Railroad Traffic
U.S. Rail Coal Traffic
(Average Weekly Carloads Originated)
155,000 2008
150,000
145,000 2006
140,000
135,000
130,000
2007
125,000
120,000 2009
115,000
110,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Excludes U.S. operations of CN and CP. Source: AAR Weekly Railroad Traffic
Overall U.S. Rail Traffic
(Average Weekly Carloads + Intermodal Units Originated)
625,000
2006 (most traffic ever for U.S. railroads)
600,000
575,000
550,000
525,000 2007 (second most traffic
500,000 ever for U.S. railroads)
475,000 2009 2008
450,000
425,000
400,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Excludes U.S. operations of CN and CP. Source: AAR Weekly Railroad Traffic
Plus – The Rail Fuel Price Index has
Displayed Some Volatility
800
700
600
500
400
300
200
Mar 06
Mar 07
Mar 08
Mar 09
May 06
Jul 06
Nov 06
May 07
Jul 07
Nov 07
May 08
Jul 08
Nov 08
May 09
Jan 06
Sep 06
Jan 07
Sep 07
Jan 08
Sep 08
Jan 09
Fuel Price Index
Source – AAR 100 = Jan 15, 1989
State of the Rail Industry Today
YTD carload traffic down 19.5%;
YTD intermodal traffic down 17.0%
~500,000 freight cars (~31% of total)
and ~5,000 locomotives (~20%) in
storage
Down 17,000 employees (~10%)
since Nov. 2006 peak
But – still making infrastructure
improvements – 2009 will be third
largest year in history - $8.8 billion
Which Way
for the
Economy?
