COVID-19 impact on rail service

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COVID-19 impact on rail service

Unread postby chapmaja » Sun Mar 22, 2020 1:28 pm

Obviously we know that the Cornoavirus outbreak which is causing COVID-19 has eliminated or lessened the frequency of many passenger rail services. Have the freight railroads been impacted significantly and if not, what will the biggest impacts be in your opinion?

My thinking is the biggest impact initially will be with the shutdown of the auto manufacturing plants. You will see a reduction in the transportation of finished automobiles and the inbound auto parts traffic (what little still remains). It would not shock me to see auto specific train annulments starting within the next couple days.

I'm not sure what the next area to be significantly impacted will be though. The biggest issue will be if industries start being shut down as a result of state shelter in place orders.

I do think overall there will be a significant downturn in rail traffic in the near term.

One other area that is going to be hit and hit hard is the transportation of crude oil. This is not directly due to the virus outbreak, but is a combination of many factors. The price of crude has tanked from its price a few months ago, partially due to political battles. As a result some of the tougher to extract oil reserves will not be operated to capacity, thus reducing the reliance on rail transportation to transport those crude supplies.
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Re: COVID-19 impact on rail service

Unread postby trainjunkie47 » Mon Mar 23, 2020 12:33 am

Finished autos will continue to move provided there are people available to move them. GM is the only automaker whose inventory is drawn down currently, due to the strike last fall. The other variable will be if people aren't out buying cars, then they won't be shipped for that reason. Ford, FCA, Toyota, and others have 90 days inventory on most of their models.

Building materials loads will fall right off the cliff until later this summer. Nobody is going to be constructing homes or buildings right now.

Finished consumer goods will lag, but not tremendously so. People are already ordering gadgets to keep themselves occupied at home.

Frac Sand and Frac Chemicals will also collapse in demand until the price of oil goes back north of $65, or even higher. Even the best and most efficient fracking operation cannot produce a barrel of oil for less than $40 a barrel.

Demand for most food related items, both raw and finished, should hold steady. People have to eat. Grains, corn syrup, sugar, and vegetable oils aren't going to suffer at all, except in possible individual cases where a factory is required to close.
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Re: COVID-19 impact on rail service

Unread postby Pixl » Mon Mar 23, 2020 5:24 pm

trainjunkie47 wrote:
Building materials loads will fall right off the cliff until later this summer. Nobody is going to be constructing homes or buildings right now.

Not true, at least here in Traverse City. My family is trying to replace a home that burned down last year and contractors are as busy as ever puting quite a delay on starting.
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Re: COVID-19 impact on rail service

Unread postby chapmaja » Mon Mar 23, 2020 8:01 pm

Pixl wrote:
trainjunkie47 wrote:
Building materials loads will fall right off the cliff until later this summer. Nobody is going to be constructing homes or buildings right now.

Not true, at least here in Traverse City. My family is trying to replace a home that burned down last year and contractors are as busy as ever puting quite a delay on starting.


My thinking as well, at least before this morning. We have several houses in my area that are going up and work has continued. Additionally work has been continuing on several commercial projects around my area. Interestingly, one of the commercial projects is a new medical center. I can see home construction being stopped due to the Stay at Home Order, but the medical center construction could be a different story.

On a side note: Not all manufacturing will be stopping even with this order. My father's employer told him to plan on working because his company provides product to the medical supply industry and the United State Government. They have been told by several customers, including the Department of Defense they are a critical importance supplier. (Thank God he is still working, because 3 weeks of being stuck at home with him every day might result in me having a new living arrangement, the County Jail :>)
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