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Railroads Pin Hopes on Auto Manufacturing as U.S. Carloads Sustain Record Decline
May 22, 2020 Class I, Freight, Freight Forecasting, News
FreightWaves SONAR: Railroads Pin Hopes on Auto Manufacturing as U.S. Carloads Sustain Record Decline
Written by Joanna Marsh, FreightWaves
The Class I railroads are closely watching the restart of North American automotive production, hoping that the slow ramp-up will not only grow motor vehicle volumes but also improve demand for supplies such as steel and plastics, according to executives at recent investor conferences. However, a key unknown variable is whether consumer demand will lift volumes for automobiles and other goods, executives said.
“Our auto plants reopened this week with very limited production. The sustainability of that production is going to be highly dependent on consumer demand and consumer confidence to go out there and buy automobiles,” said Norfolk Southern (NYSE: NSC) Chief Marketing Officer Alan Shaw during Wolfe Research’s virtual conference for investors on May 20.
Limited auto production resumed this week among major U.S. automakers, according to various news reports, and production in Mexico is expected to restart on June 1, although the government previously announced it would begin production in mid-May.
Shaw added that the slow ramp-up in auto production would also likely result in “puts and takes” for auto suppliers since some supplies, such as steel, are already at the plants. The auto industry’s suppliers might not see demand recovery until auto production has been up and running for some time, according to Shaw.
{snip}
FreightWaves SONAR: Railroads Pin Hopes on Auto Manufacturing as U.S. Carloads Sustain Record Decline
Written by Joanna Marsh, FreightWaves
The Class I railroads are closely watching the restart of North American automotive production, hoping that the slow ramp-up will not only grow motor vehicle volumes but also improve demand for supplies such as steel and plastics, according to executives at recent investor conferences. However, a key unknown variable is whether consumer demand will lift volumes for automobiles and other goods, executives said.
“Our auto plants reopened this week with very limited production. The sustainability of that production is going to be highly dependent on consumer demand and consumer confidence to go out there and buy automobiles,” said Norfolk Southern (NYSE: NSC) Chief Marketing Officer Alan Shaw during Wolfe Research’s virtual conference for investors on May 20.
Limited auto production resumed this week among major U.S. automakers, according to various news reports, and production in Mexico is expected to restart on June 1, although the government previously announced it would begin production in mid-May.
Shaw added that the slow ramp-up in auto production would also likely result in “puts and takes” for auto suppliers since some supplies, such as steel, are already at the plants. The auto industry’s suppliers might not see demand recovery until auto production has been up and running for some time, according to Shaw.
{snip}