The rail freight market has strengthened further in the first two weeks of September for Kansas City Southern, after a strong August performance, said the company’s chief financial officer.
As of this week, “there’s nothing we see in our business that would give us any indication that we’re heading back into any type of a double-dip” recession, KCS’s Michael Upchurch told the Morgan Keegan transportation conference Tuesday in Chicago.
That was the latest in a growing series of reports out of the freight rail sector that shipments are still rising even though net job creation stalled last month.
Upchurch said based on average daily carloads “August of this year was the best month we’ve had in the last five years.” And in the first half of September, he said, “we’ve actually seen a continuation, where the average daily carloads have gone up over the August average.”
Separately, the industry reported that railcar owners across North America pulled more parked cars out of storage in August, as freight traffic perked up some from summer lows.
Upchurch also said when he visited investors last week in New York, they wanted to know how railroads see the economy unfolding but few said they believed the U.S. is heading into a new recession. “Despite all the media reports,” he said, of sour economic indicators, “I think the investment community is … not thinking we’re going to slip back into a recession.”
Kansas City Southern is the smallest of the Class I group of seven large North American railroads. It operates two connected rail units, one in the south-central U.S. and the other in Mexico.
Coming out of the 2008-2009 downturn, he said KCS has grown faster in freight volume than other Class Is, and that analysts expect it to maintain a faster growth pace for the next few years.