Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, January 9, 1994 TAG: 9401070017
SECTION: BUSINESS PAGE: F1 EDITION: METRO
SOURCE: Greg Edwards Staff Writer
DATELINE: LENGTH: Medium
Norfolk Southern Corp. is looking for a good year in 1994, said Don Bourquard, NS's director of market research and economics.
Bourquard noted that unemployment has dropped across NS's service area and that the economy as a whole had a strong fourth quarter. Consumers are more optimistic and that's driving factory production, which helps the railroad, he said.
The railroad has improved its efficiency and productivity, which has helped hold freight rates down. That along with better customer service has helped NS capture freight traffic from the trucking industry, Bourquard said.
"We're approaching a more truck-like service, at least for long hauls," Bourquard said. Even traditional trucking companies like J.B. Hunt and Schneider are using the railroad to carry its trailers on some long hauls.
Increased cooperation between NS and other railroads has also helped the company improve its customer service, Bourquard said.
Last year was a pretty good year for the trucking industry compared with the previous three years, said Ken Simonson, an economist with the American Trucking Association.
Simonson said he expects trucking business to continue growing this year with a 3 to 4 percent increase in production of goods nationwide. Trucking volume should be up between 3 and 5 percent and haulage rates should hold steady or possibly increase a little, he said.
Fuel prices are expected to remain flat or possibly drop a little, Simonson said. But the really big cost of operation - labor - may increase. Long distance truck load carriers have been having a hard time finding qualified drivers who are willing to put in the long hours that the job requires, Simonson said. That shortage should push up the cost of labor for truckers.
Companies that provide meals for their drivers will see their costs rise as the portion of that expense that's deductible for tax purposes drops from 80 percent to 50 percent, Simonson saidi
The trucking industry generated an estimated $313 billion in revenues in 1993, or about 78 percent of total U.S. freight revenues, according to a U.S. Commerce Department report.
Trucking's challenges this year include continued rate pressure from railroad competition, increased labor costs and regulatory expenses. On the other hand, an improving economy, expanded trade with Mexico and Canada and improving European and Japanese economies should help the industry, Commerce said.
For the airline sector, the Roanoke Regional Airport is expecting 346,000 departures this year compared with 336,000 in 1993, a 3 percent growth, according to airport spokesman Mark Courtney.
The airport is coming off a good year in terms of fares and number of available passenger seats, Courtney said.
Conditions in the airline industry - including stable fares, an increase in low-cost competitors - and improving economic conditions point to positive growth, he said.
"We should get our share of that growth," Courtney said.
Two recent studies, one commissioned by the Roanoke airport and another by state government, point to an average annual growth in the number of departing passengers of 2.9 percent at the airport through 1997 and 3.4 percent through 2012, Courtney said.
The U.S. Commerce Department said it expects all segments of the transportation industry to grow modestly in 1994 as the U.S. economy continues its recovery. "The outlook for the airline industry depends on the health
of the U.S. economy, whether capacity is properly balanced with demand and whether the industry can achieve stable costs and fares," Commerce said. "If these three conditions are met, profitability should return to the industry."
An increase of 3 percent in revenue ton-miles for the nation's freight railroads is expected and truckers can expect revenue growth of roughly 6 percent in 1994, the government said.
"Coal traffic, the top commodity carried by the railroads, is expected to grow by 2 to 3 percent in 1994 after its 1993 decline," Commerce said. Intermodal traffic, which involves the transport of large freight containers, is expected to remain the fastest growing segment of the rail business with growth of between 3 and 5 percent.
by CNB