Further, truck traffic density makes up one-third of all traffic along slammed Southeast interstate routes, which one railroad analyst who preferred anonymity said could drive intermodal use for companies who operate in the region like CSX (CSX) and Norfolk Southern (NSC).
The AAR reported on Thursday that intermodal volume was up 6.4% for the week ending June 11 against the same week last year.
Investors could also leap for railroads as the latest forecasts call for 2011 coal exports to hit 100 million tons, a number that the railroad industry has not seen for about 20 years.
"Export demand for coal is growing rapidly," said Chris Jenkins, vice president of CSX coal service groups. "[CSX] export tonnages, which were in the 12 million to 13 million ton range five years ago expanded to 30 million tons in 2008, dipped a little bit during the heart of the recession, recovered to 30 million tons in 2010, and this year we expect to move about 40 million tons."Judging by those numbers, CSX had a good year as the U.S. Energy Information Administration estimates total U.S. coal exports for 2010 hit 81.7 million tons. Why are coal exports expected to surge in 2011? One reason is that Australia, a key player in the international sector, experienced massive floods earlier this year that froze the industry and paved the way for increased demand from American markets. CSX warned investors that increased shipments in coal exports could decline after Australia resumed full export levels. But as Australia has recovered much quicker than expected, domestic exports have continued to rise in Europe and Brazil, which one firm said was a pleasant surprise for railroad analysts. "[T]he structural shifts in power generation back toward coal in developed countries such as Germany (which is shutting all nuclear reactors by 2022) should provide another leg of demand for U.S. steam coal well beyond 2011," Matthew Troy, an analyst at Susquehanna Financial Group, reported on Monday. All-in-all, Daniel Keen said that between intermodal and coal, railroads could grow at a "real nice healthy clip."
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