FW: [T_2000] U.S. ECONOMIC RECOVERY LEADS TO CONGESTED RAIL ROUTES
- It's not ironic to see some thing about rail congestion when ones considers
how much trackage has been ripped up over the past 60 years. Go figure.
>U.S. ECONOMIC RECOVERY LEADS TO CONGESTED RAIL_________________________________________________________________
>Rail news & views | July 2004
>18 July 2004
>IN circumstances quite different to anything experienced by
>Britain's railways, United States' railroads are facing major
>problems of congestion and under-capacity due to growing
>freight demand � caused by the strengthening economy and
>increasing imports and exports, coupled with shortages of
>rolling stock, train crews � and even of power, for the locomotive
>manufacturers cannot keep up with demand.
>Forty per cent of all freight tonnage in the U.S. is carried by train
>� about five times more than in Britain. But in the first half of this
>year rail-cargo shipments rose 6% and are now heading for an
>annual total that would exceed last year's record, the Association
>of American Railroads reports.
>The expanding U.S. economy, which grew at 4.4% in the first
>quarter, and a rise in imports from Asia � notably China and to a
>lesser extent, India � have led to major limitations on rail freight
>movements from West Coast ports, primarily affecting the Union
>Pacific Railroad, which by sales is the largest U.S. railroad.
>Ironically, on the other side of the world, in China � where many
>of the US imported goods are coming from, and where the
>economy has grown at an unprecedented 9.8% in the past year
>� the complaint is that they don't have sufficient rail capacity to
>cope with their booming export trade.
>China now has 70,000 km (43,750 miles) of rail tracks. "But
>these are insufficient to carry all our cargoes," says Professor
>Wang Derong, President of the Society for Transportation and
>Logistics in China, and head of the new branch of the world-wide
>Chartered Institute of Logistics and Transport in China. "China
>is facing acute problems in its transport sector, which is
>expected to receive priority investment in the next 10 years."
>Indian Railways at present have fewer problems and are
>benefiting from the world trade boom. In the first quarter of the
>current financial year, to 30 June, Indian Railways transported
>141.39 million tonnes of freight, compared to 133.17m during
>the corresponding period last year, representing a 6.2%
>Last year, according to Prof. Derong, Chinese ports handled 480
>billion TEUs (20ft equivalent units), and throughput exceeded
>that of all U.S. ports for the past two years � since China was
>admitted to the World Trade Organisation.
>In 2002, according to Chinese Customs' data, merchandise
>exports were worth US$325.7bn and imports $295.2bn, leaving
>a surplus for China of $30.4bn.
>By comparison, the United States continues to run a huge trade
>deficit � but according to the Commerce Department, the trade
>gap was down to $46bn (�24.8bn) in May this year, from $48.1bn
>in April. The narrowed trade deficit reported in May was
>unexpected, and has been put down to a weaker dollar and
>improving global economic growth boosted by record export
>* "Huge strain on transportation"
>As U.S. economic recovery has grown, average freight train
>speeds are reported to have fallen 6.7 percent in the first half of
>this year, and a shortage of truck drivers is restricting the
>alternative choice of road transport. The cargo network last faced
>major strains in 2002 when there was a 10-day lockout of West
>Coast dock workers in dispute with their employers. This year,
>the U.S. economy is expected to grow around 4.5 percent, the
>fastest since 1999.
>Jack Koraleski, a Union Pacific executive vice president, in a
>letter to customers, has referred to "the huge demand and strain
>on all forms of freight transportation" in the United States at
>present. "We must take necessary steps to limit the volume on
>our system if we are going to be able to restore our system
>In fact, during the second quarter of 2004, the company handled
>more wagon-loads than in any other quarter in its history.
>Union Pacific is striving to hire new train-crew workers and to
>add locomotives and railcars (wagons). The Omaha,
>Nebraska-based company last month said second-quarter
>profits lagged analysts' estimates because of delays. Its
>average train speed has dropped 12 percent this year.
>Union Pacific has announced it is limiting loadings and the
>number of railcars (wagons) in key corridors, including on the
>West Coast between Seattle and Roseville, California; Los
>Angeles and El Paso; Los Angeles and Salt Lake City � and in
>the central corridor, through Iowa and Illinois.
>The Burlington Northern Railroad, based in Fort Worth, Texas,
>has also set limits on some eastbound international cargo from
>Los Angeles to prevent congestion as Asian imports rise.
>Commodities, including coal and grain, and other raw materials
>such as chemical, are chiefly shipped by rail. About 60 percent of
>all coal burned by U.S. utilities is delivered by rail.
>But Arch Coal, the second-largest U.S. coal producer, recently
>said rail delays and missed shipments had reduced its
>second-quarter profit by almost 40%. A spokeswoman said the
>company is experiencing delays on Union Pacific and CSX � the
>number three rail freight carrier in the U.S., whose train speeds
>have dropped 4.9 percent this year.
>"We are paying very close attention," said Roger Nober,
>chairman of the U.S. Surface Transportation Board, which
>regulates railroads. "I want the carriers to be sure that they
>articulate to their customers what plans they have in place to
>meet the fall (autumn) peak. The ultimate problem is that I can't
>make crews, locomotives or new track materialise out of
>Nober said it can take at least a year for railroads to plan and
>complete projects to add tracks. New workers can take six
>months to be trained.
>To complicate the situation further, U.S. railroad operators are
>finding it difficult to buy additional locomotives to ease the
>General Electric Company, among the biggest manufacturers of
>rail traction, has sold out all 700 units being built this year,
>spokesman Patrick Jarvis said. The company's
>productiorailroads such as Union Pacific have bought new
>General Motors Corporation, the other U.S. builder of rail
>locomotives, has doubled production from last year and is using
>all available capacity, a spokesman said.