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The railroad industry suffers from the following: falling volume, supply glut, a drop in orders, and customer problems.

Freight volume, which drives demand for railcar orders, has been down sharply in 2009. The Association of American Railroads reported that railcar traffic was down 15.8% in January and February compared with the same period in 2008. Almost every category of freight was down, with coal shipments the best at a 3% decline and motor vehicles and equipment the worst, down 56.9%.  The fall in freight volumes has led to a huge supply glut of unused railcars sitting around on existing track. Several towns have filed complaints with both UNP and BNI over hundreds of idle cars on tracks waiting for business.

Another headwind facing the industry is a possible decline in profitability in the railroad sector, one of its largest groups of customers, due to new legislation introduced in Congress. The industry says the legislation would impact its ability to set prices.

Total industry orders in 2009 are expected to face even steeper declines. One industry group predicts that order levels will reach that last seen in 1985, when only 9,510 orders were received.