Survey: Shippers Favor Rails Over Truckers

Supply chain managers surveyed by Longbow Research said current economic environment favors rails, and availability of adequate rail capacity replaced fuel prices as a top concern.

NEW YORK -- According to a semi annual survey of supply chain managers conducted by Longbow Research analyst Lee Klaskow, the current economic environment favors rails over truckers.

Thirty-three percent of shippers surveyed said the availability of adequate rail capacity was the top concern, compared to the third quarter of 2008, where 48 percent said fuel prices were their biggest concern.

"What a difference six months makes," said Klaskow. "Shippers are now worried that actions taken by rails to manage through the downturn might create capacity constraintes when demand returns."

Supply chain managers remain overwhelmingly negative regarding outlook.

"The vast majority of our contacts reported a complete lack of catalysts to spur growth over the upcoming quarters," Klaskow added. "Among survey respondents, 86 percent believe we will still be in recession in six months, compared to 60 percent who held this view in third quarter 2008."

Klaskow noted that with the uncertainty surrounding the economy, shippers favor the rail subsector because it has higher exposure to less cyclical freight, such as agricultural products and coal. Also, despite declining demand, railroads have been able to get base rate increases of 4-6 percent and better fuel surcharge recovery than trucking.

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