Factory Slump
Cargo volumes have held up better at Canadian Pacific Railway Ltd. and Canadian National Railway Co., as more maritime cargo from Asia shifts to Canadian ports. But in the U.S., sagging freight shipments are taking a toll.
The Institute for Supply Management’s factory index slipped to 47.8 in September, the lowest since June 2009. It was also the second straight month the index was below 50, which signals contraction.
Truckers are also feeling the pain. Less-than-truckload cargo, which tends to be tied to industrial production, plummeted 12% in August from a year earlier. Freight carried by long-haul trucking is still growing as consumer spending holds up. Truck cargo prices, though, have dropped.
Cheaper trucking rates are pulling some freight from rails. But even if that trend moderates next year and the decline in rail carloads slows, there’s no guarantee of growth -- especially if the factory weakness drags down consumer spending.
“That’s the risk at this point in time, that the consumer does begin to show impacts from the pain that we see on the manufacturing side,” Hartford said. As for rail freight, “when is it going to turn? I honestly have no idea.”
This article was provided by Bloomberg News.