RAIL TRAFFIC UP IN MARCH DESPITE SOFTER ECONOMY COAL SHIPMENTS ESPECIALLY STRONG

RAIL TRAFFIC UP IN MARCH DESPITE SOFTER ECONOMY COAL SHIPMENTS ESPECIALLY STRONG

Strong coal shipments propelled rail freight traffic to a 1.5 percent increase in March, but weakness in other key commodities reinforced the picture of a sluggish economy, particularly in the manufacturing sector.

With two consecutive monthly increases, the first quarter also ended on the positive side, eking out a 1.1 percent gain over the comparable 1989 period.In both March and the quarter, however, coal loadings increased more than the overall gain; all other rail carloadings actually declined, cumulatively.

"The first quarter was a remarkable recovery," said Drew Robertson, president of Atlantic Systems Inc., a New York consulting firm that provides data for The Journal of Commerce'smonthly review of railroad freight.

Mr. Robertson pointed out that intermodal traffic - trailers and containers on flatcars - registered a 4.6 percent gain in the quarter and an even higher 5.5 percent increase in March.

Automotive traffic has been a black hole for the industry. The key group was off 19.7 percent for the quarter, although March was only down 1.7 percent.

Pointing out the weakness in manufacturing, auto and parts business virtually disappeared in January as carmakers closed plants for inventory reduction.

But, "Typical for the auto industry, they overreacted on the downside," Mr. Robertson said. "Recent auto traffic is back to 'normal' levels."

Aden Adams, vice president, merchandise sales and marketing at CSX Distribution Services, the marketing arm of CSX Transportation Inc., said bulk commodities were very strong in March and early April.

In addition to coal, he cited strong loadings of aggregates for highway construction, phosphates and fertilizer moving to the Midwestern corn belt and chemicals, mostly for export.

Although grain was off for the industry, Mr. Adams said "agricultural products were very bright. We beat our business plan significantly in March, and early April business is up about 20 percent from plan and compared with a year earlier."

Mr. Robertson said weakness in grain comes primarily in wheat. Corn appears to be moving, reflected in data from railroads that are strong in the corn belt areas, and in weakness at the Atchison, Topeka and Santa Fe Railway, which has a higher proportion of wheat in its normal traffic mix.

"Overall, March grain traffic fell. Stockpiles are low right now, so I don't see a recovery soon," Mr. Robertson said. "There's no big overhang to be shipped, regardless of price increases that ordinarily would induce farmers to move their grain."

D. Henry Watts, executive vice president, marketing, at Norfolk Southern Corp., said he has seen strengthening in chemicals, with "slight year-over- year increases."

Coal is the principal commodity on NS, and Mr. Watts said coal loadings have been solid.

Norfolk Southern is one of only two major railroads to report a decline in intermodal units handled. It was off less than 1 percent in March; Chicago and North Western Transportation Co. was down 20 percent.

Mr. Watts said part of the softness for NS was a result of pricing actions on Florida-bound traffic. The loss of some container double-stack business to Burlington Northern Railroad's expanding intermodal unit also was a factor, he said.