The decline in unconventional oil and natural gas drilling in shale fields across the country has cut into the benefits for the nation's leading railroads, with everything from crude-by-rail to oilfield supply shipments curtailed through the first quarter of this year.

The steep drop in commodity prices since mid-2014 and the cost-cutting measures that have led to a more than 50% decline in the U.S. rig count since roughly that time are expected to keep shale-related rail shipments flat for the remainder of this year. That trend comes after more than five years of impressive segment growth for the rail industry.

"We expect that crude oil prices will remain a significant headwind for crude-by-rail shipments for the rest of the year," said Union Pacific Corp. Executive Vice President Eric Butler during a first quarter earnings call. "Lower crude oil prices will also impact some of our industrial products markets. We expect metals to continue to experience headwinds, as capital investments for new drilling activities are reduced.

"Frack sand shipments were up modestly in the first quarter, but we expect them to be meaningfully lower year over year starting in the second quarter," he added.

Union Pacific, which operates primarily on the West Coast and Gulf Coast, saw its year-over-year crude oil shipments decline 38% in the first quarter. Butler said that was mainly the result of lower commodity prices and the pullback in drilling in some of the nation's leading unconventional oil fields.

Although crude oil accounted for just 1.6% of all carloads transported on the nation's leading railroads in the first half of 2014, such traffic has increased markedly over the last six years with the sharp increase in oil and natural gas production. According to the Association of American Railroads (AAR), just 9,500 carloads of crude oil were transported in 2008, but by 2013 the number had grown to 407,761. Through the first half of 2014, 229,798 carloads were reported.

The AAR recently reported that railroads originated 113,089 carloads of crude oil in the first quarter, down by 17,982 carloads, or a decline of nearly 14% compared to the same time last year.

At CSX Corp., which primarily operates on the East Coast, CFO Fredrik Eliasson said the company also expects crude shipments to remain flat for the remainder of the year. The company's oilfield supplies shipments were also down about 10% year over year in the first quarter, but Eliasson said those volumes could increase as activity in the Marcellus and Utica shales has not declined as dramatically as it has in oilier fields.

CSX competitor Norfolk Southern Corp., which also operates primarily on the East Coast, said it expects growth in natural gas liquids transport from the Marcellus and Utica.

"However, lower oil prices are expected to cause declines in our metals and construction group as drilling activity slows, reducing shipments of pipe, frack sand and other drilling imports," said President Jim Squires at the end of the first quarter.

Norfolk handled about 29,000 crude-by-rail shipments during the first quarter, up from 22,000 in 1Q2014. That increase, COO Mark Manion said, was mainly due to new customers. But with "softening oil prices, we do expect the growth rate for crude-by-rail to decelerate," and remain flat at around 29,000-30,000 carloads for the remainder of the year, he said.

Through the first half of 2014, the AAR estimated that railroads shipped about 11% of all domestic crude oil production. The Energy Information Administration recently said in its Short-Term Energy Outlook that U.S. crude oil production would surpass 9.3 million b/d during the second quarter before falling off and declining by 2,800 b/d in the first quarter of 2016.

Many railroad executives said they don't foresee volume growth again until U.S. benchmark prices stabilize around $70/bbl.

"We'd like to see oil prices back in the $75 range," Butler said. "Clearly, that would be better for us."