Rail News Home Rail Industry Trends May 2017 Rail News: Rail Industry Trends BNSF Railway Co. has posted strong growth in its finished motor vehicle segment.Photo – BNSF By
This email address is being protected from spambots. You need JavaScript enabled to view it., Senior Associate EditorAs the auto industry's turmoil reverberated through the economy during the Great Recession in 2008, freight railroads felt the pain through diminished auto traffic.By the end of 2009, total motor vehicle and equipment traffic had plummeted 31 percent to 834,476 units compared with 1,211,095 units in 2008, and 39 percent when compared with 1,375,424 units in 2007, according to
Association of American Railroads (AAR) data.But by 2010, things started to turn around for the auto industry. And that recovery continued to roll on at least through 2016, when a record 17.5 million new cars and light trucks were sold in the United States.The industry's comeback over the past six years also has benefited railroads' business of moving finished cars, light trucks and auto parts for their customers, Class I executives say. And automotive remains a strong segment, although this year it may level off in some areas depending on railroads' locations and the automotive plants they serve.Some of that leveling off has been reflected in the AAR's weekly traffic data reports. Through the first 15 weeks of 2017, all North American railroads reporting to AAR logged 407,051 carloads of motor vehicles and parts, down 3.5 percent compared with volumes during the same period in 2016.For
BNSF Railway Co., the automotive segment in terms of finished vehicles has registered strong growth, says Dave Fleenor, BNSF assistant vice president for automotive marketing. BNSF serves two automotive plants directly: Toyota's plant in Tupelo, Miss., and the automaker's plant in San Antonio, Texas."Obviously, the overall automotive growth has been pretty significant," Fleenor says. "This year is relatively flat [in auto sales] for the industry."Still, the average age of vehicles is 11 years old, so there’s still significant pent-up demand for new cars in upcoming years, Fleenor adds.BNSF has added capacity — track and parking areas — to accommodate the growth of its automotive business. BNSF Railway Co.
"The [auto] industry forecasters are predicting approximately the same volume for the next four or five years," he says. "I think there is potential for an upside. If the economy and job situation were to improve from where it is today, I believe that would result in increased sales for our manufacturers."
Also, the decline in gasoline prices starting in 2014 has contributed to growth in the number of small trucks and SUVs being sold. In that year, finished automobiles represented about 50 percent of vehicles sold; this year, they’re on pace to represent about 37 percent. SUVs, small trucks and crossovers are expected to represent the majority of vehicle sales, says Fleenor.