BUFFETT: Railroads 'will almost certainly' have a bad year

Railroads are having a tough go of it, and Warren Buffett doesn’t think it’s going to get any better.

“Car-loadings throughout the industry are down this year,” said Buffett at his company Berkshire Hathaway’s annual meeting Saturday.

Buffett went on to say that the industry is facing a tough time and probably won’t recover for “the balance of the year.”

Buffett’s Berkshire Hathaway is the owner of Burlington Northern Santa Fe railroad, which it purchased in total for $26 billion in 2009. BNSF is one of the largest railroad networks in the US.

Carloads, or the number of individual cars moved along the tracks, have been tumbling for over a year as production of materials that railroads usually ship have been curtailed.

The biggest of these has been coal, which makes up roughly a fifth of all carloads. The decline in coal shipments has been precipitous and it doesn’t appear to be turning around any time soon. Additionally other energy materials, including oil, and have hit the railroads big time.

Buffett has called total carloads his “desert island” indicator of how the total economy is doing, but add all that those factors and you get the grim outlook at Buffett alluded to.

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