2011 proved to be a good year for the Class I US railroad industry. Overall, carloads were up 2.2% and intermodal moves increased 5.3%.
These positive gains were due to an increase in demand of such commodities as coal, petroleum and automobiles. Also, modal shifts from trucking and air benefited the railroad industry.
US Class I railroad companies, CSX, Kansas City Southern, Norfolk Southern and Union Pacific recently reported fourth quarter and annual 2011 earnings. In each of the earnings reports, all of the railroads reported positive revenue growth for both the fourth quarter and the year, much of which was attributed to higher rates and fuel surcharges.
For the fourth quarter, CSX reported revenue of $2.9bn, a 4.6% increase; Kansas City Southern reported $531m, an 11% increase; Norfolk Southern reported $2.8bn, an almost 18% increase and Union Pacific reported $5.1bn, a 16% increase.
For 2011 year-end earnings, all the railroads reported double digit increases in revenue. CSX reported $11.7bn, a 10% increase; Kansas City Southern reported $2.1bn, a 15.6% increase; Norfolk Southern reported almost $11.2bn, a 17% increase and Union Pacific reported $19.6bn, a 15% increase.
While revenue gains were impressive, volumes were a mixed bag. CSX reported that its 2011 total volumes increased 1%. Coal shipments declined 3% while intermodal was flat. Its Merchandise group was the only group to report a positive gain at 5%.
Kansas City Southern, the smallest of the Class I US railroads, reported strong growth in automobiles, up 22% and intermodal, up 18%. Total volumes increased 7% for the company. Norfolk Southern's annual volumes increased 5%, led by a 10% increase in intermodal and a 4% increase in coal. Union Pacific total volumes increased 3%, with its Chemical group reporting the strongest increase at 9%.
Strong intermodal growth appears to have benefited the US Eastern railroad company Norfolk Southern at the expense of CSX, while Kansas City Southern benefited from increased Mexican cross-border activity, consumer demand for automobiles and intermodal moves. Finally, Union Pacific, which operates in the West, saw intermodal decline because of slow imports on the US West Coast. However, oil exploration in the West benefited the company, attributing to a 46% increase in petroleum shipping.
The outlook for 2012 remains cautious, but optimistic for the railroad industry. It is expected that the US economy will continue its slow path to recovery. Because of this, many of the railroad companies anticipate growth in intermodal activity and also in commodities such as petroleum and automobiles.
Content provided in partnership with Transport Intelligence.
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