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U.S. railroads in biggest slump since 1988

How quickly things change: It was only two springs ago that I wrote a story, detailing the resurgence of the long-dormant U.S. freight rail system, thanks to booming global trade and soaring gasoline prices. Railroads like the one I wrote about -- Norfolk Southern--were literally carving out the roofs of tunnels to accommodate flatbed railcars stacked two-high.

That was then. This is now.

The Great Recession has hammered the U.S. railway industry. People stopped buying things, so manufacturers stopped making things, which meant there was a lot less to ship. Imports and exports slowed, as well, meaning trains stopped hauling things to and from the coasts. And big freight rail customers such as UPSalso had fewer things to ship.

In 2009, total carload traffic on U.S. railways fell to its lowest level since 1988, the Association of American Railroads reported Wednesday.

Traffic in 2009 was down 16.1 percent compared with 2008 and down 18.2 percent compared with 2007.

“Railroads are happy to have 2009 behind them,” association senior vice president of policy and economics John Gray said in a statement. “Last year saw declines, most of them quite steep, in every major category of rail carload traffic as well as intermodal."

Intermodal railroad traffic is the shipping of trucks and ship containers via railroad. Those are the big containers you see stacked on rail flatbeds rolling by.

The slump in railroad traffic -- and attendant decline in earnings -- is what made Burlington Northern Santa Fe a great buy for super-investor Warren Buffet in November, when he bought the rest of the railroad that he didn't already own for $34 billion. A clever wag once wrote that Buffett was buying the world's biggest train set. Okay, that was me. (Disclosure: Buffett is lead director of The Washington Post Co.)

-- Frank Ahrens
Follow me on Twitter at @theticker

By Frank Ahrens  |  January 13, 2010; 5:18 PM ET
Categories:  The Ticker  | Tags: Association of American Railroads, Burlington Northern, Norfolk Southern, Warren Buffett, railroads, trains  
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