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US RAIL VOLUMES UP

NEW YORK - US rail executives are reporting solid increases in late 2003 cargo volumes, lifting rail shares on optimism the big cargo haulers were picking up steam from America's economic recovery.

Carloadings lifted by especially strong consumer products cargoes were up 5% so far in the fourth quarter at Union Pacific Corp., according to Chief Financial Officer Jim Young.

"Most markets continue to show growth," Oscar Munoz, chief financial officer at CSX Corp., said at a New York investors conference sponsored by Smith Barney.

CSX has seen carloads rise 7% over last year's levels so far in the three months that will end December 31, Munoz said.

David Goode, chief executive of Norfolk Southern Corp., which boasts 21,500 miles of track in 22 states and Ontario, said a pickup in volumes seen in October had continued during November.

Thomas Hund, chief executive of Burlington Northern Santa Fe Corp., said his company was adding fresh business from broad categories of shippers. Only chemicals and automotive customers were showing weakness, executives said.

"We are probably not in a position to actually declare the recovery is under way," he said at the conference carried on the Internet. "I am probably one of the more cautious guys in our company, and I do like what I see."

US brokerage Merrill Lynch, which recently raised its investment ratings on CSX, Norfolk Southern and Canadian Pacific Railway Ltd. to "buys," said other winds helping freight railroads were moderating fuel prices and improved, more reliable operations.

"Volumes continue to climb at an expedited rate, with overall weekly volumes up 4.5% year-over-year," Merrill said in a research note. "Excluding intermodal [or loads of mostly finished consumer and other goods], volumes climbed 5.3%, the fastest growth rate in 43 weeks..."

Railroads carry mostly cheap, bulky goods such as coal, raw food and industrial parts. Demand for rail transport typically picks up with overall economic activity, especially as manufacturers increase production.

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