Dahlman Rose 2011 survey:

According to Dahlman Rose & Co.’s proprietary Third Quarter 2011 Rail Shipper Survey (completed by participants with over $10 billion in combined transportation purchasing power), railroad shippers anticipate an average base rate increase of 4.3% over the next 6-12 months. “Although this result is lower than the 4.6% expected in our 2Q11 Survey, it remains slightly ahead of the 4.2% recorded in the same period last year,” says Dahlman Rose Director-Equity Research and Railway Age Contributing Editor Jason Seidl. “Investors should note that our models currently call for 4-5% price increases for the Class I railroads.”

After a 2Q10 drop in business growth expectations, shippers, who regained some confidence for three consecutive quarters in 3Q10, 4Q10, and 1Q11, “became less optimistic in 2Q11, and even less so in 3Q11, as they now expect their respective businesses to grow at an average rate of 4.5% over the next twelve months,” according to the survey. “This is lower than the 6.6% recorded in our 2Q11 survey and the lowest figure since 2Q09. Additionally, the majority of shippers, or 90%, said they were less confident in the direction of the economy now than they were three months ago. This is a deterioration from the 75% that said they were less confident in response to our 2Q11 survey. Only 10% of participants remain more confident in the direction of the economy now than three months ago, compared to the 25% in our previous survey.”

A majority of shippers surveyed, or 55%, expect their headcount to remain unchanged over the next twelve months. About 31% of those surveyed expect their employee count to increase over the next year, and 14% believe it will decrease. This is compared to the 58% surveyed last quarter who expected headcount to remain unchanged, the 35% who expected headcount to increase, and the 8% who thought it would decrease. “Although there is a deterioration in hiring expectations, we believe such a deterioration is modest relative to the decidedly negative macro sentiment,” Seidl notes. “This may be a confirmation of our view that market fears are based more on sentiment than business fundamentals. Additionally, shippers who want to increase their headcount or keep it unchanged continue to constitute a majority, or 86%.”