rails show signs of rebound

Like their counterparts in air, ocean, and truck transportation, railroads have responded to the recession by cutting capacity, slashing payrolls, and pulling thousands of pieces of equipment out of service. But that may not go on much longer. One industry observer says carrier executives appear certain that rail freight is already on track for recovery.

One sign is that most have furloughed—not dismissed—employees. That's an important distinction, said Christopher Aadnesen, vice president, national rail freight services for the consulting firm HNTB Corp., at the Coalition of New England Companies for Trade (CONECT) Annual Northeast Cargo Symposium. The fact that the railroads continue to pay for those employees' health insurance and other benefits indicates they believe they'll need those experienced hands soon. Aadnesen should know; in a past life, he was a VP of human resources and transportation at the Union Pacific.

Another indication that the rails see better times ahead is their continued investment in intermodal expansion projects like the Norfolk Southern's Heartland Corridor and CSX's National Gateway. "They have not stopped spending money during the recession," Aadnesen said. "They expect growth." That growth will come from the Panama Canal expansion as well as from increased demand for domestic intermodal transportation, which has helped to soften the blow of declining international trade volumes.

Intermodal, in Aadnesen's opinion, will be the catalyst for the railroads' revival. "I think the use of railroad assets in storage will come roaring back, driven by intermodal growth beginning next year," he said. It looks like the tide has already begun to turn, he added. "They have already begun bringing cars and locomotives back into service."