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Fitch: US Rail Traffic Hurt by Coal, Other Modes Stable
Business Wire Fitch Ratings
February 8, 2016 1:11 PM
NEW YORK--(BUSINESS WIRE)--
Recent declines in rail traffic are unlikely to spread to other modes of transportation as the declines are primarily attributable to coal shipping, which mainly relies on rail transportation, Fitch Ratings says. However, rail traffic declines will persist into the midterm.
The Association of American Railroads (AAR) reported that total US rail carload traffic in 2015 declined by 2.5% from 2014 levels. 2015's overall rail traffic was below levels not seen since the rail traffic recovery began in 2009. AAR reported that 2016 is off to a mixed start as well. Overall carload traffic in January was 16.6% lower than January 2015. However, a closer look at the long-term annual data indicates that the majority of the declines are due to lower coal shipping. If coal is excluded from 2015 data, rail volume is comparable to levels seen in 2013 and 2014, on the strength of intermodal container traffic.
Coal usage has seen a large decline as power generators and other industries have switched to other means to produce energy. The US Energy Information Administration estimates US coal production declined by 11% in 2015. That was the largest decline in history. The organization also forecasts that coal production will continue to decline by 4% in 2016 and 1% in 2017. This will likely impact rail traffic for years to come. Coal is one of the largest users of rail traffic, accounting for nearly one-quarter of volume, along with intermodal containers and petroleum products.
However, we expect these trends to have only modest impacts on other modes of cargo movement. Data show that truck volume has been stable. Coal is typically not shipped via truck. Port container throughput growth slowed only marginally in second-half 2015. Volume declines in coal in the past year have been partly offset by continued intermodal cargo growth.
The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings.
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.
View source version on businesswire.com: http://www.businesswire.com
February 8, 2016 1:11 PM
NEW YORK--(BUSINESS WIRE)--
Recent declines in rail traffic are unlikely to spread to other modes of transportation as the declines are primarily attributable to coal shipping, which mainly relies on rail transportation, Fitch Ratings says. However, rail traffic declines will persist into the midterm.
The Association of American Railroads (AAR) reported that total US rail carload traffic in 2015 declined by 2.5% from 2014 levels. 2015's overall rail traffic was below levels not seen since the rail traffic recovery began in 2009. AAR reported that 2016 is off to a mixed start as well. Overall carload traffic in January was 16.6% lower than January 2015. However, a closer look at the long-term annual data indicates that the majority of the declines are due to lower coal shipping. If coal is excluded from 2015 data, rail volume is comparable to levels seen in 2013 and 2014, on the strength of intermodal container traffic.
Coal usage has seen a large decline as power generators and other industries have switched to other means to produce energy. The US Energy Information Administration estimates US coal production declined by 11% in 2015. That was the largest decline in history. The organization also forecasts that coal production will continue to decline by 4% in 2016 and 1% in 2017. This will likely impact rail traffic for years to come. Coal is one of the largest users of rail traffic, accounting for nearly one-quarter of volume, along with intermodal containers and petroleum products.
However, we expect these trends to have only modest impacts on other modes of cargo movement. Data show that truck volume has been stable. Coal is typically not shipped via truck. Port container throughput growth slowed only marginally in second-half 2015. Volume declines in coal in the past year have been partly offset by continued intermodal cargo growth.
The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings.
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.
View source version on businesswire.com: http://www.businesswire.com
Emphasis added.
MODS: Posting more paras to include the attribution and disclaimer.
ETA: I saw some articles back in Jan about the decline in rail traffic, suffesting this was a harbinger of a coming economic downturn. This analysis says the explanation may be much more benign.
