Dive Brief:
- U.S. rail freight carriers believe business will prosper along with a strong economy, regardless of President-elect Donald Trump's pledge to re-map the North American Free Trade Agreement (NAFTA), reported ABC News Wednesday.
- Leaders within the rail freight industry are also hoping for infrastructure improvements promised by Trump, as increased port activity means an uptick in the necessity of load hauling.
- Intermodal transport added up to 15.75 million, or roughly half the 31.5 million loads carried by North American railroads in 2016. Trade with Mexico comprised nearly 12% of Union Pacific's volume.
Dive Insight:
While many railway transport executives anticipate a thriving future under President-elect Trump, factors that have led to recent slumps remain.
The drop in oil to a low of $27 a barrel in February 2016 meant that fuel surcharges earned by rail transporters were drastically reduced, thereby allowing the trucking industry to make inroads into what was previously considered rail-only territory. Hitting the railroad industry simultaneously, a dip of 12.4% in coal production, long a railroad transport staple, dealt another significant blow. Lastly, failed mergers between lines, thanks to tight government regulation, prevented positive consolidation efforts which would have vastly increased available track.
Is such a positive outlook among railroad management warranted? The fact is that railways are suffering most from low energy price and production. Will those specific conditions change once the new administration takes office? Rail freight carriers seem to think so, but the goods on this economic trip are not entirely within their hands.
