North American rail provider Norfolk Southern’s results for the first quarter of 2010 show a 14% increase in automotive volume due in part to new business in the northeast of the US.
“Norfolk Southern opened two new destination auto facilities in New England located on the new joint venture, Pan Am Southern. They are located near Albany, New York and Boston, Massachusetts,” said a Norfolk Southern spokesperson.
Pan Am Southern is a 50:50 joint venture established in 2008 by Norfolk Southern and Pan Am Railways to create an improved the rail route (dubbed the Patriot Corridor) between Albany and Boston, including new intermodal and automotive terminals.
Norfolk Southern has also reported a record increase in revenue per automotive unit by 25% that the company said is because of new contract pricing which was renegotiated in 2009 and 2010 agreements, as well as rate adjustments taken in current agreements and length of haul extensions resulting from the renegotiated agreements.
“Record automotive RPU was driven by a successful major legacy contract negotiation and a change in our vehicle service network, which resulted in an extended length of haul,” said Norfolk Southern’s executive vice president and chief marketing officer Don Seale in an earnings call held last week.
In reference to railway volume, automotive contributed an increase of 16% compared with the same period in 2009 but the company’s business outlook indicates that automotive increase will be offset this year because of the impact of Ford’s network redesign.
“This redesign on an annual basis will eliminate some 33,000 carloads, moving in and out of the service centres, which previously were billed as separate shipments,” said Seale. “Also, this new design removed the overhead handling of some 11,000 carloads per year.”
“We are somewhat cautious about the short-term volumes until we can determine that retail demand is sustainable,” the spokesman told Automotive Logistics News.
However, the company maintained that it has a positive long-term outlook for its automotive business.