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US railways suffer as trucks poach rail freight in third quarter
RAILWAYS lost freight to trucks in the third quarter, adding to a yearlong fall in profits as demand diminished for coal, oil and metals.
Goods hauled in containers, fell a second consecutive quarter for the first time since 2009, according to the Association of American Railroads (AAR).
A surplus of trucks has pushed down freight rates and lower diesel prices have chipped away at rail's usual fuel-savings advantage.
Box volume for the industry dropped 5.3 per cent while all traffic declined 6.3 per cent, according to the AAR.
"The rails have actually lost some cargo to trucks this year because the spot market is so pulverised and because diesel prices are relatively low," said John Larkin, an analyst at Stifel Nicolaus & Co.
Railways have invested in switching yards and the ability to double-stack containers to compete better with trucks for long-haul intermodal traffic.
This is one of the few types of freight with potential to grow faster than the economy, said Bloomberg News. The segment makes up 40 per cent or more of rail volume.
Meanwhile, truck freight has increased 3.5 per cent this year through August, according to the AAR.
Coal continues to be the biggest drag on US rail, dropping 16 per cent in the third quarter.
Demand is under pressure from rules to cut carbon emissions and as power plants burn cheaper natural gas. The decline has decelerated, however, from 28 per cent in the second quarter and 33 per cent in the first.
Goods hauled in containers, fell a second consecutive quarter for the first time since 2009, according to the Association of American Railroads (AAR).
A surplus of trucks has pushed down freight rates and lower diesel prices have chipped away at rail's usual fuel-savings advantage.
Box volume for the industry dropped 5.3 per cent while all traffic declined 6.3 per cent, according to the AAR.
"The rails have actually lost some cargo to trucks this year because the spot market is so pulverised and because diesel prices are relatively low," said John Larkin, an analyst at Stifel Nicolaus & Co.
Railways have invested in switching yards and the ability to double-stack containers to compete better with trucks for long-haul intermodal traffic.
This is one of the few types of freight with potential to grow faster than the economy, said Bloomberg News. The segment makes up 40 per cent or more of rail volume.
Meanwhile, truck freight has increased 3.5 per cent this year through August, according to the AAR.
Coal continues to be the biggest drag on US rail, dropping 16 per cent in the third quarter.
Demand is under pressure from rules to cut carbon emissions and as power plants burn cheaper natural gas. The decline has decelerated, however, from 28 per cent in the second quarter and 33 per cent in the first.
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