North American forest products rail freight down 3.5% in 2016 as lumber increases, pulp and paper declines

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North American forest products rail freight down 3.5% in 2016 as lumber increases, pulp and paper declines

January 06, 2017 - 13:44
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OAKLAND, CA, Jan. 6, 2017 (RISI) -The Assn of American Railroads reported year-end totals for forest products freight in 2016 in North America, while major carriers showed mostly lower pulp and paper volume offset by lumber/wood products, notably for Canadian carriers.

Total North American forest products railroad freight for 2016 was down 3.5% from 2015 to 927,974 carloads, accounting for 5.2% of all carloads, AAR reported. Total North American carload freight was down 7.2% in 2016 driven by a drop of 19.5% for coal, the biggest commodity on the rails, and a 18.9% drop in petroleum-related cargo.

In the final week ending Dec. 31, forest products freight was up 0.5% to 16,050 carloads.

US forest products freight in 2016 fell 7.1% to 523,784 carloads and in the latest week was 5.4% higher to 10, 316 carloads. Canada was up 1.8% in 2016 to 402,975 carloads and was down 7.3% in the latest week to 5,703 carloads. Mexico dropped 40.6% to 1,215 carloads in 2016 and was up 24% in the week to 31 carloads, AAR reported.

"Last year was challenging for freight railroads," said AAR Senior Vice President of Policy and Economics John T. Gray.  "Rail carloads were down for the second consecutive year, due mainly to a weak manufacturing economy and turmoil in energy markets, while intermodal failed to set its fourth straight annual record.  That said, there are signs that the economy may be gradually returning to a period of growth."

Canadian Nationalreported 2016 pulp and paper freight declined 5.8% from 2015 to 166,043 carloads and in fourth quarter were down 1.9% to 41,271 carloads. Lumber and wood products freight was 7.9% higher for the year to 168,839 carloads and in the quarter was up 6.5% to 40,693 carloads.

CSXreported its 2016 pulp and paper rail freight dropped 9.4% to 144,086 carloads and in the fourth quarter was 7.4% lower to 35,286 carloads. Lumber/wood products in the year was 2% lower to 59,005 carloads and in fourth quarter were down 1.2% to 13,996 carloads.

Union Pacificpulp and paper freight in 2016 was down 5% to 88,013 carloads and in fourth quarter was 1% lower to 22,169 carloads. Lumber/wood products for the year was 1% higher to 118,346 carloads and in the quarter was 2% higher to 28,252 carloads.

BNSFshowed pulp and paper freight for the year was off 0.5% to 71,216 carloads and in the fourth quarter was 5% lower to 18,121 carloads. Lumber/wood products was up 1.3% for 2016 and was flat in the fourth quarter.

Canadian Pacificshowed its 2016 pulp and paper freight was up 0.9% to 37,794 carloads, and lumber/wood products freight was up 13% to 27,358 carloads.

2017 outlook.AAR said in its outlook that market shifts in the US economy have led to challenges in the freight rail industry, especially as it relates to rail traffic.

Freight railroads have outlined a series of policy recommendations designed to help preserve and enhance the industry's positive impact on the nation's economy, while allowing for continued safe, efficient and reliable freight transportation service.

“We remain focused on providing the best possible rail network for our customers and all Americans," said Edward R. Hamberger, AAR pres/CEO, "and as a result, the freight rail industry will advocate for a simpler and fairer tax code to enhance US economic development, promote growth and reduce debt. Freight railroads will also push for a sustainable funding source that provides for aggressive investment in public infrastructure."

Hamberger also addressed the industry's ongoing concern with a series of proposed regulations before the Surface Transportation Board (STB).

"The freight rail industry is capital intensive and must spend massive amounts of its money to maintain infrastructure and equipment. Current STB proposals would inhibit railroads' ability to continually invest the amount of capital needed to make the 140,000-mile network work for Americans. The Board should be cognizant of the economic impact our industry and promote regulations that enhance job growth and development," Hamberger added.