Union Pacific is pulling railcars from storage for the first time in four years to haul lumber for home builders, a welcome source of strength for an industry that’s bucking the effects of a slowing economy.
North American rail carloads of lumber and wood products this year through July 28 were 10% higher than the same period in 2011, according to the Association of American Railroads. That compares with a 1.4% drop in total carloads.
Union Pacific, Canadian National Railway and CSX are among companies benefiting from new-home construction, which climbed in June to the highest in almost four years. Sustained gains in sales of cars and trucks, which are transported, along with parts, by rail, and the ability to raise prices also provide a boost for railroads.
“The expectation is for continued growth in construction-related activity, whether it’s lumber or aggregates, to help support rail volumes in 2013 and beyond,’’ said Ben Hartford, an analyst in Milwaukee at Robert W. Baird & Co.