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David Hannon -- Purchasing, 11/18/2004 2:00:00 AM
Rail carriers are seeing unprecedented demand and "the best rate environment in nearly 25 years, with rates expected to climb another 1.5% in 2005," according to a re-cent research report from Merrill Lynch transportation analyst Ken Hoexter. Despite sky-high fuel prices, Merrill Lynch reports that some major rail carriers have avoided a major diesel hit by hedging fuel contracts. Norfolk Southern has hedged as much as two-thirds of its fuel buy in the third quarter while Burlington Northern Santa Fe (57%) and Canadian National (56%) have followed suit in the third quarter. Union Pacific was not so fortunate, reporting that its fuel prices shot up 39% during the third quarter.
The booming demand for rail has created traffic snarls, notably on the West Coast of the U.S. and Canada, but rail carriers are making efforts to overcome them and meet demand. Canadian Pacific Railway and CN recently announced they will work together to move freight more efficiently through the port of Vancouver by allowing each other greater access on their rail lines in the vicinity of docking facilities at the Pacific port, which is seeing booming volumes including ships diverted from the Port of Long Beach, where delays continue to grow.
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