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Freight industry moves metals toward recovery

Keywords: Tags  metal shipments, American Trucking Associations, Bob Costello, freight transportation,

The ups and downs of a recovering recession have meant uncertainty at times during the first half of 2012, but the freight transportation industry nevertheless is moving along, helped in no small measure by shipments from the metals sector.

And in a symbiosis of sorts, the metals sector gets a boost when freight transportation thrives—the materials to build new containers, truck cabs, rail cars and other modes of transportation come from steel, aluminum and other metal producers, who benefit when orders stream in for large, durable equipment.

Primary metals, ores, finished products and ferrous and nonferrous scrap all saw relatively healthy tonnages moving within the United States in the first two quarters of 2012, the bulk of them carried by truck and rail. And exports saw a number of shipments leave the United States from ports on the East, West and Gulf coasts. By June, those industries were still making headway from capacity losses they suffered during the Great Recession, although their numbers were still well below pre-recession levels.

Year to date, tonnage moved by truck was up 3.8 percent compared with the same period last year, according to American Trucking Associations (ATA) statistics. However, the ATA’s advanced seasonally adjusted For-Hire Truck Tonnage Index decreased 1.1 percent in
April—the most recent month for which figures were available—after increasing 0.6 percent in March. “While April’s decrease was a little disappointing, the March gain turned out to be stronger than originally thought,” ATA chief economist Bob Costello said. “The ups and downs so far this year are similar to other economic indicators.”

The Association of American Railroads also reported mixed figures, with U.S. railroads originating 291,381 carloads in the week ended May 26, up 1.3 percent from 287,693 in the same period last year, but the year-to-date total of nearly 5.92 million carloads was 3.1 percent below more than 6.11 million a year earlier, although the shipment of 4.84 million trailers and containers was up 2.9 percent from 4.7 million last year. But year-to-date shipments of metals and metal products were up 9.1 percent to 232,169 carloads from 212,789 a year earlier; metallic ores rose 10.1 percent to 141,369 carloads from 128,440; and iron and steel scrap inched up 1.4 percent to 103,095 carloads from 101,685.

Including Canada and Mexico, North American railroads originated 373,165 carloads in the week ended May 26, down 1 percent from 377,059 in the same period last year, and the year-to-date total of 7.82 million carloads was 1.8 percent below 7.96 million a year earlier, although shipments of metals and metal products were up 6.1 percent to 315,340 carloads from 297,175 a year earlier; metallic ores rose 4.6 percent to 438,402 carloads from 419,212; and iron and steel scrap was up 2.8 percent to 131,251 carloads from 127,655.

After several lean years, North American demand for rail freight cars is expected to boom in 2012 and continue on that course for the next few years, according to rail car manufacturers, railroads and major shippers. At the same time, design advances will increase the amount of steel used in each rail car, especially in new high-pressure tank cars.

The industry expects to deliver around 50,000 new rail cars this year and about 60,000 in 2013, according to an industry source who is a member of the North American Freight Car Association, noting that the projected new builds could remain above the 60,000 level through 2015. The industry averaged 53,000 new cars annually from 1995 through 2009.

A new freight car contains 18 to 20 tons of steel—structural, sheet, plate and bar—so the steel requirements in an average year would be around 1 million tons. Annual aluminum tonnage consumption would total about 180,000 tons, with the only major demand for aluminum being for coal cars.

The projected breakout of car types each year for the post-2013 period is about 20,000 covered hoppers (for grain, sand and plastic pellets), 13,000 tank cars, 12,000 doublestack container cars, 8,000 gondolas (primarily for coal and a smaller number for scrap and steel), 7,000 open-top hoppers (coal and aggregates), 3,000 conventional flat cars (steel, automotive and lumber) and 2,500 box cars.

On the water, concerns about the eurozone crisis and a slowing of China’s economy don’t seem to be hampering the maritime flow of North American bulk cargoes, such as iron ore and coal, as the first half of 2012 came to a close. Ports across North America were reporting strong shipments of bulk cargoes, and they anticipate a continuation in the second half of the year, according to the Cleveland-based Lake Carriers’ Association, which represents 17 American companies that operate 55 U.S.-flag vessels on the Great Lakes.

Iron ore is the backbone of the Great Lakes trade, but U.S. and Canadian vessels also haul millions of tons of bulk coal and limestone on the Great Lakes-St. Lawrence Seaway system each year. About 80 percent of the iron ore in global maritime commerce originates in Brazil, Australia or Africa and is delivered to steel mills in China, Japan and Europe. The United States and Canada are self-sufficient in iron ore and move the commodity on a vast inland waterway system.

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