According to the Association of American Railroads, total traffic on major U.S. and Canadian railroads was 3.1% higher during the first 41 weeks of 2011 than during the same 41 weeks of 2010. If rail were to carry 50% of the freight that moves 500 miles or more by 2035, as suggested by the Federal Railroad Administration, it will need to carry roughly 60% more containers than it does today, and that doesn’t include growth in other types of shipments, like boxcars and coal cars.
In his latest market outlook, Railway Tie Association (RTA) Executive Director Jim Gauntt noted, “Railroads [have] provided a buffer for tie producers who otherwise would have been at the mercy of plummeting demand for other low-grade hardwood products.
RTA’s surveys of the rail community suggest a similar path going forward.” U.S. Class 1 railroads laid in 14.3 million ties in 2010, and Canadian installs totaled 2.1 million. RTA believes tie producers will find steady demand for the next 2.5 years. If the short line tax credit is extended, the 2014 forecast for new crosstie demand will return to within 2.5% of 2006’s peak level.
The question remains whether tie supplies will be sufficient to meet demand. Year-on-year tie production was 46% higher through August 2011! However, if markets for flooring-grade oak and other low-grade lumber items strengthen, tie prices will have to rise to sustain their share of sawmill production.
Andy Johnson is the Southern Regional Editor for Hardwood Publishing Co.
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