Milling & Baking News - June 16, 2009 - 21

Transportation and Distribution

Freight costs fall with lower fuel prices;
tonnage drops due to sluggish economy
Continued from Page 1

tonnage actually hauled before seasonal adjustments, was down 2.9%
from March at 101.6, the A.T.A. said.
"It could be a few more months"
before truck freight hits bottom, Mr.
Costello said.
Rail shipments told much the same
story. U.S. May rail carload traffic was
down 25% from May 2008 at 989,306
carloads, and intermodal traffic was
down 20% from a year ago at 723,898
units (trailers and containers), the
American Association of Railroads
said. Grain carloads totaled 21,910
in May, down 25% from a year ago,
compared with metals and metal
products down 63%, motor vehicles
and equipment down 52%, chemicals
down 18% and coal down 16%.
"Industrial production is still down
sharply across the board," said John
T. Gray, senior vice-president for the
A.A.R. "That means lower demand
for rail service for everything from
chemicals and scrap metal to cement
and ores. Basically, railroads are in a
waiting game - waiting for the economy to turn."
U.S. carload rail traffic totaled
1,349,097 loads in the first five months
of 2009, down 20% from the same period last year, the A.A.R. said, while
intermodal traffic was 788,814 units,
down 17% from a year ago.
Another indication of sluggishness in rail demand was the Surface
Transportation Board's monthly employment report of class I line-haul
railroads, which showed all employees in April at 154,263, down 6% from
April 2008. Transportation (train and
engine) employees stood at 58,806 in
April, down 14% from a year earlier
and by far the largest decline of the
six categories measured. The reduction in train and engine employees
was a point of concern for some in the
grain industry, who indicated that
should rail demand be stronger than
expected in a given area, the railroads
might be pressed to have engineers
available even if locomotives and cars
were plentiful.
Ocean freight rates, on the other
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hand, while significantly below yearago levels, have been rising the past
several months.
The U.S. Department of Agriculture
noted in its June 4 Grain Transportation Report that the cost of shipping
wheat from Kansas or North Dakota
through the U.S. gulf to Japan in the
first quarter of 2009 was up about
18% from the previous quarter but
was down about 65% from the first
quarter of 2008.
"Ocean rates increased in part due
to more iron ore imports to China,"
the U.S.D.A. said. "Compared to last
year, however, the change in ocean
rates was significantly lower because
bulk vessel supply is outpacing demand."
The number of ocean going vessels
in U.S. gulf ports or due to load grain

in the next 7-10 days as of May 28 was
down from 11% to 50% from 2008 averages, indicating the slow pace of export demand, the U.S.D.A. said.
The freight rate to ship grain from
the U.S. gulf to China was $38 a tonne
in the last week of May, down 53%
from $80 a tonne for the same route
a year ago, according to one example
from the U.S.D.A.
Lloyd's List International reported
in early June that rates for shipping
grain or iron ore from the U.S. gulf
and eastern South America to Asia
was at an eight-month high, and that
vessels for immediate loading were in
short supply.
The bulk dry freight index on London's Baltic Exchange finally eased
slightly early last week, after trading
higher for 15 consecutive sessions

Milling & Baking News

June 16, 2009 / 21

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Milling & Baking News - June 16, 2009

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