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Latest Headlines
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Mar 12, 2010 4:02:00 PM MST
Growing transportation demand suggests global freight recession over: analysts (Freight-Recovery)
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MONTREAL _ Growing demand for cargo transportation suggests the global freight recession may have ended, but industry observers remain concerned that a rising Canadian dollar may bring the progress to a screeching halt.
After bottoming out in the second quarter of last year, demand for rail, air and trucking transportation has materially strengthened over the last four weeks, a report from UBS analysts Rick Paterson and Fadi Chamoun says.
"We´re no longer limping along from quarter to quarter," they wrote.
But the head of the Canadian Trucking Alliance said the industry remains fragile even though the situation has improved since last fall.
"There are optimistic signs and things appear to have turned the corner but I don´t think people are dancing in the streets just yet," David Bradley said in an interview.
He added that the fragile recovery could still be undermined by the Canadian dollar´s march towards parity.
The Canadian dollar touched a 20-month high against the U.S. greenback on Friday, briefly trading for 98.47 cents, its highest level since July 2008, before closing at 98.20 cents U.S., up 0.57 of a cent.
A rising loonie makes the country´s exports more expensive to buy in the U.S.
Cross-border traffic, which accounts for about 40 per cent of trucking volumes and is responsible for the sector´s growth over the last 20 years, is down 20 per cent from last year.
Meanwhile, railways in Canada and the United States saw their non-coal volumes increase compared with a year ago as total carloads for the week ending March 6 grew by 13 per cent to 739,292, the highest level since November 2008.
The Port of Long Beach also said container traffic in February grew by 30 per cent from last year, while the Port of Vancouver reported shipments early this year topped its expectations after falling 11 per cent last year.
"We are pleased with the trend toward increased volumes that we have recently experienced through Port Metro Vancouver," said CEO Robin Silvester.
Walter Spracklin of RBC Capital Markets noted railway carloads are still down 9.8 per cent from 2008, but said things are at least moving in the right direction.
Canadian railways were ahead of their U.S. peers, with carloads up by 20.5 per cent from a year ago compared to an 11.4 per cent increase south of the border, he said in a report.
So far this year, Canadian National Railway´s (TSX:CNR) carloads are up 13.4 per cent, compared with 5.2 per cent on average for railroads.
At Canadian Pacific Railway (TSX:CP), carloads are up five per cent for the year to date.
Another sign of positive trends is that the number of freight cars in storage reached its lowest level in a year.
On the Toronto Stock Exchange, CN Rail shares closed at $58.39, up 39 cents in Friday trading. CP shares increased 12 cents to $56.35.
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