Photo credit Tyler Silvest
Inside This Issue
· Shrink Again: Rail Volumes Fell in 2023, as They Did in 2022
· Shrinking in the New Year? Will Growth Finally Soar in 2024?
· More Border Disorder: Railroads on Front Lines of Migrant Crisis
· Border Builder: In Texas, A New Plan for a New Bridge
· Maritime Grind: New Disruptions to Ocean Shipping
· Green Sprout: Greenbrier Sees Ongoing Strength in Railcar Demand
· Economy Dichotomy: U.S. GDP Growing Strongly Despite Areas of Weakness
· Superstars at MARS: Rail Execs to Speak at Midwest Shipper Event
Track Talk
“We’re closely monitoring conditions at the southern U.S. border. While the work performed by our skilled manufacturing and logistics colleagues so far has successfully avoided severe impacts to Greenbrier, the current migration response is unsustainable. We have joined many including railroad leaders, shippers, and even our competitors to draw government attention to the situation.”
- Greenbrier CEO Lorie L. Tekorius
Publisher’s Note: Welcome to 2024! It’s sure to be another exciting year for North America’s railroad sector. Railroad Weekly will help you stay informed every step of the way. The year is already off to an information-filled start, with the Midwest Association of Rail Shippers hosting its winter event in Chicago this week. As in years past, I look forward to seeing many of you there. Happy New Year! -Jay Shabat
The Latest
· Growth, growth, growth. Throughout 2023, North America’s major railroads insisted that their days of downsizing were over. No more shedding assets. No more mass furloughs. The time had come to grow. But they didn’t grow last year, at least not in volume terms. According to the AAR’s almost final data for 2023 (the latest figures run through Dec. 30th), North American railroads saw their freight volumes decline 2.3% from 2022. Remember that last year, volumes declined 1.9%. So, that’s two straight years of shrinking activity for the industry.
· Versus 2018 (the industry’s peak year for traffic), volumes in 2023 were down 10% continent-wide. All ten major categories of freight tracked by the AAR, in fact, are producing lower volumes today than five years ago (when PSR-inspired downsizing was just getting started at several major Class Is).
· Take a closer look at the 2023 vs. 2018 comparison below. You’ll quickly see that coal volumes are down by a fifth, due to less demand as North America transitions to cleaner forms of energy. So, to be clear, the fact that railroads are less busy today than pre-pandemic isn’t all related to PSR-downsizing. The heavy intermodal declines are perhaps most disappointing—the container business was supposed to be a growth engine for the industry. Relatively speaking, the only bright spots are chemicals, metallic ores, and farm products excluding grains; all are at least up from 2019 levels, if not 2018 levels.
· From an investor point of view, shrinking volumes have not led to shrinking profits. On the contrary, profits have been very strong for the industry, albeit down y/y in 2023 (more on that in a few weeks when railroads start reporting Q4 results). Still, railroads say growth is necessary for future earnings to stay strong, especially with costs rising and regulatory pressures building.
· Will railroads finally show some growth in 2024? There are some encouraging signs. During the final quarter of 2023 (October-to-December), U.S. volumes in
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