Market Trend of Rail Freight Transportation – United States
- Fuel price for rail freight transportation started to increase after the historical low rates in Q1-2016, price index of US railroad fuel has experienced more than 50 percent increase year till date(Dec-2016)
- In the overall cost of operation, fuel component has increased by 2-3 percent in Q4-2016 compared to the previous quarter, which is estimated to decrease in the subsequent quarter by 1-2 percent
Rail Freight Cost Index
- In Q1-2017, despite drop in labor and depreciation cost involved in rail freight transportation, overall cost of index has increased by 1.54 percent (Y-o-Y)
- With expected spike in wage rate and equipment rental and maintenance overall cost index for rail freight transportation is likely to increase in the next one year
Supply and Demand Balance
- In 2016, rail freight volume decreased compared to the previous year majorly due to drop in volume of petroleum products moved to the south eastern region.
- However, demand for rail freight is majorly backed by raising rail freight volume of food grains, farm products, metallic and non-metallic minerals in the last one year
- Demand for rail freight is expected to gradually increase with growing demand for shipments such as chemical, grains and nonmetallic minerals from the major origin points in Dallas, Los Angeles and Chicago
Cost of Operation – Rail Cargo Service in United States
- Overall cost of operation for rail cargo service has decreased by 1 percent.
- Drop in major cost components such as labor and depreciation by 2-3 percent and ~1 percent respectively has led to downward trend in overall cost of operation.
- However, minor cost components such as equipment rental, material and suppliers as well as interest expense continue to increase with marginal impact on overall cost
Analysis of Top Rail Cargo Operators - Europe
- In Europe, major rail cargo operators continue to sustain in the strong trucking dependent market environment. After weak demand for the rail freight transportation with less than 1 percent market growth in terms of volume, major cargo operators are starting to consolidate volume with the help of freight forwarders in the region.
- China – Europe rail trade has been one of the major boost for the rail cargo operators with more shipments from hi-tech, fashion retail, electronics and chemicals moving from the consolidation point in Far East China to Western European countries.
- Top three operators are trying to increase the market share by increasing the frequency of schedule within Europe and China-Europe schedule with DB Schenker, SNCF and PKP cargo being more dominant in terms of volume