The good news for major rail carriers just keeps on coming. Bulk rail volumes have hit their second peak this year. Carriers can thank Russia's embargo on grain exports for the surge in grain loads (waterway operators on the St. Lawrence Seaway can be just as thankful).
Smart carriers are adding capacity as fast as they can. Norfolk Southern just completed modifications to its Heartland Corridor that will enable it to carry double-stacked containers all over the middle parts of the U.S. of A. Not to be outdone, Canadian Pacific Railway is adding capacity cheaply by increasing the number of intermodal and grain cars hauled per train. Carriers and lessors are responding to high demand by pulling idle railcars out of stored fleets.
It's a good time to be a railroad carrier, but I wonder about the sustainability of all this action as we enter the second part of this big recession. Rail traffic is peaking in the face of macroeconomic negatives like persistent unemployment and record increases in the number of working-age people below the poverty line. This is a contradiction that won't last long.
