Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, January 8, 1995 TAG: 9501060060
SECTION: BUSINESS PAGE: F-1 EDITION: METRO
SOURCE: GREG EDWARDS STAFF WRITER
DATELINE: LENGTH: Long
``Generally, we'll see continued strong growth in rail traffic'' in 1995, predicted Bill Rennicke of Mercer Management Consulting, a Lexington, Mass.-based consulting firm. And that's very good news for the nation's railroads, considering that 1995 was one of their best years ever.
Major U.S. railroads broke a record for the most freight handled in a single year during the week ending Dec. 3, according to the Association of American Railroads.
Norfolk Southern Corp., widely acknowledged as one of the nation's best-managed railroads, hauled freight at record levels during 1994 and, as of early November, was 7 percent ahead of 1993 in terms of carloads moved. Chairman David Goode said NS expects another good year in 1995.
Special factors, such as new steel plants, will help NS outperform the economy in a number of cases, Goode said. NS's coal hauls to electric utilities should grow with the economy and export coal shipments should benefit from a recovering European economy, Goode said.
Much of NS's success depends on its coal movements, Rennicke said.
The corporation, which employs more than 3,000 people in the Roanoke Valley, also has been very creative in terms of its merchandise services, Rennicke said, mentioning Road Railer in particular. Road Railer is a type of rail car that also is equipped with rubber tires, meaning it can move either on rails or highways.
The growing partnership between railroads and trucking companies for the movement of long-distance intermodal freight has been important to NS as well as other railroads. Also, NS is well-positioned to work with American Presidential Lines and other steamship companies to increase its intermodal business, Rennicke said.
NS has been a leader in holding down operating costs, he said. NS and other railroads will have a need in this year's rail labor talks to cut labor costs further, he said.
Growth in intermodal freight has been more important for the railroads than for the trucking companies, said Ken Simonson, an economist with the American Trucking Association in Washington. Intermodal represents only 3 percent of the total freight market for trucks, he said.
The trucking industry has had ``a great couple of years,'' and the outlook for trucking in 1995 is ``still pretty rosy,'' Simonson said. As evidence, trucking companies are continuing to order new trucks, he said.
And, when they order new trucks, they're looking for equipment that is more productive and more comfortable, Simonson said. Comfort is important because companies have had trouble attracting drivers willing to make long trips.
Growth in trucking generally follows growth in the gross domestic product, but that rule hasn't held firm as manufacturers move away from keeping large inventories. ``More and more trucks have become rolling warehouses,'' Simonson said.
Simonson foresees some increase this year in wages, which account for 60 percent of trucking companies' costs. Fuel costs should remain steady, he said. More and more fleets are ordering satellite or cellular communications equipment to help them better deliver their goods, he said.
The biggest risk facing the trucking business is a combination of environmental problems and traffic congestion that make it more and more difficult for trucks to take the goods the last 15 miles into a city, Simonson said.
A drop in the price of trucking company stocks indicates the stock market believes 1995 is going to be a slower year than 1994, said Steven Nieman of Mercer Management's San Francisco office. Nieman said he tends to agree with the market but noted 1994 was an exceptionally good year.
Not all trucking companies have enjoyed the prosperity, though. Nieman pointed out that Allied, Mayflower and other household movers have suffered because businesses and the military are not moving as many employees as they did in the past.
In the airline industry, the turmoil and change make it difficult to forecast, said Mark Courtney, a spokesman for Roanoke Regional Airport. The future depends on the competition among the major airlines and new low-fare carriers on the East Coast, he said.
Courtney said he expects air service levels at the airport, where there are 51 daily departures, to remain stable through the winter. In the meantime, the airport continues to seek a second airline to provide jet service at the airport. ValuJet, one of the new low-cost carriers, is one of the airlines that has been approached, he said.
On the cargo side, the airport expects to sign a contract this year for engineering services for a new cargo ramp. Cargo tonnage at the airport through October was up 31 percent for the year, compared with the first 10 months of 1993.
by CNB