The financial chiefs of three major U.S. railroads said Thursday they expect their ability to set prices to hold this year and next even though volume has been soft so far this year….Omaha, Neb.-based Union Pacific Corp., for example, said second-quarter volume is down about 4 percent so far, due to weakness in some markets and bad weather that affected shipping.
But the volume woes aren’t expected to affect pricing, said the financial chiefs of Jacksonville, Fla.-based CSX Corp. (NYSE:CSX), Norfolk, Va.-based Norfolk Southern (NYSE:NSC) and Union Pacific (NYSE:UNP).
I found the comment interesting, since I noted way back in December that the huge surge in pricing power the railroads enjoyed in 2005 and 2006 was beginning to peter out. Consider the latest graph, based on yesterday’s PPI release from the Bureau of Labor Statistics:
Granted, the current price increases are still among the best of the last 20 years. So perhaps the managers are taking a longer-term perspective. At any rate I gave up on the trade when I found out Warren Buffett was on the other side of it. Still, that chart doesn’t look to me like pricing power has not been affected.