Improved Auto Demand Lifts Rail Shipments

U.S. sales of new automobiles are strengthening for all the largest car manufacturers, and generating sharp increases in shipments for materials, car parts and finished vehicles.

Shipments of motor vehicles and equipment on major North American railroads grew 37.6 percent in the first 11 weeks of 2010, including a 30 percent year-over-year increase in the most recent week ending March 20, according to the Association of American Railroads.

Among the major carriers, Canada’s largest railroads are hauling 45 percent more railcar loads of vehicles and equipment so far this year, while Mexican lines that report to the AAR have seen a 58 percent gain. Major U.S.-owned rail lines, which handle most of that traffic, report a 31 percent gain in finished equipment carloadings.

The surge in rail shipments comes as automobile companies are reporting a strong recovery in car sales compared to the recession period a year ago.

A top Toyota executive said his company’s March sales could rise 35 percent from the same month last year, powered by financial incentives designed to lure buyers after months of reported safety issues for some Toyota models.

Ford is viewed as the main beneficiary of Toyota’s woes, and some analysts think its sales will be up more than 56 percent this month.

Robert Lutz, vice chairman of General Motors North America, said his company has been effectively sold out of hot new models since last summer. “When everything you’ve launched over the last 6 to 9 months is in sold-out status and the dealers are screaming for more, you know that there is demand out there,” Lutz said in a CNBC interview.

Both GM and Chrysler were in bankruptcy last year, and survived only with a hefty cash infusion from the U.S. government. However, Chrysler Chief Executive Sergio Marchionne said in New York March 30 his company should break even this year.

The demand that buoys those executives is lifting all sorts of freight shipments.

The largest rail carriers across North America say their metallic ore carloads are up 31 percent for the first 11 weeks of 2010, scrap hauls are 16 percent higher and their metals/metal products category has generated 35 percent more freight car loads.

Small and regional railroads across North America say their railcar loadings of finished motor vehicles and equipment -- a category dominated by autos -- ¬ are up nearly 11 percent through March 20 from the same period in recession-struck 2009.

(Source: JOC)