Blanchard Railroad Week in Review, Second Quarter 2002

The Railroad Week in Review:
Second Quarter 2002

Current Issues

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Week ending June 29, 2002
A loopy week on Wall Street, but the rails did OK. FEC was the big winner, up 13%. Jim Valentine reports on the CSX analysts' trip. CN to help rehab another shortline to 286. Trinity stock continues to rise even as orders are down by half. Using www.shipcsx.com demurrage page to measure rail receivers' internal processes. PBS on Amtrak: Passenger trains work best between large cities less than a day's ride apart. Chicago-LA won't work.
Week ending June 22, 2002
Union Pacific sweeps carload increases through Week 23 (chart). Goldman
Sachs initiates rail coverage; BNSF on Recommended List. Trinity Railcar short sales up 36% by Mid-June. Grain trains get bigger on CSX, NS; shipper impact positive. Rail bonds back in favor. Amtrak's David Gunn interviewed by Jim Lehrer on PBS, sees 50-50 chance for July 1 shut-down. On a more personal note, Philadelphia Mayor Street's Neighborhood Transformation Initiative (NTI) took on a new meaning this week as beauty was turned into blight in our South Philadelphia neighborhood. [details]
Week ending June 15, 2002
The shortline-class 1 interface is gaining increasing attention from both sides. This week we enumerate on some of the responsibilities for making the interchange work in a scheduled RR environment. Morgan Stanley's Week 22 traffic report shows signs of economic recovery with CSXT in the lead on chemicals. We list two new CSXT chemicals initiatives and how to
play. More on EBITDA and pro forma results, this time from Prof Wanda Wallace of the W&M B-School. Remarks to the Merrill Lynch Transp conference from BNSF, CSXT, NS, UP. Observations made at RRA reception at NYSE. May carloads for GNWR up for the system, down for same-store.
Week ending June 8, 2002
Norfolk Southern's shortline gathering in Roanoke was a huge success judging from observations offered up by both hosts and guests. The shortline benefits of the Thoroughbred Operating Plan are mind-boggling if executed well on both sides of the interchange. Chart: shortline share of NS carloads by commodity. A Kansas rail study estimates the loss of 1700 feeder railroad miles would add $50 mm a year to highway maintenance costs. Iowa Pacific is a new shortline holding company headed up by Ed Ellis. Michael Dell talks about internal "friction" impeding business growth. Amtrak now threatens to shut down the entire system. Rail stocks emerge from a down week for the Dow
relatively unscathed.
Week ending June 1, 2002
More on the BNSF/NS coal contract. Delaware to finance bridge rehab; NS to pay tolls. RailAmerica sheds two light-density lines in Texas. STB declines to overrule local court in Green Mountain Railway case. Car-builder stocks continue to languish. TRB proposes 12.% increase in truck weight.
Week ending May 25, 2002
Speaking at the January Earnings Presentation in NY, Norfolk's Ike Prillaman said 2001 "was a watershed year for our coal business as we made the transition from export and domestic metallurgical coal to developing opportunities and growing the utility market." To which I added, "The shift from export coal dependence presents new opportunities in all business lines." See WIR for 2/2/2002. The prescient Mr. Prillman's remarks have come home to roost. This week we delve into the changes in Norfolk's coal trade relative to the rest of the industry and relative to NS opportunities on the merchandise carload side. Elswhere, BNSF and NS have a contract to bring PRB coal to Georgia starting in 18 months. Both CP and GNWR gave good account of themselves at the recent Bear Stearns conference. And CN earned an upgrade from Morgan Stanley.
Week ending May 18, 2002
Intermodal loads lead commodity carloads again in Week 15. IC gets the STB's blessing to cross KCS at grade to access plastics plant in Louisiana. BNSF tapped by Wal-Mart as "Rail Provider of the Year" for the fourth time running. Genesee & Wyoming April carloads up on acquisitions in US, iron and gypsum in Australia. Bangor & Arootstic logistics and bridge subsidiaries declare bankruptcy. Trinity Industries shares remain stuck in $18-20 trading range as car orders lag last year. KCS subsidiary Grupo TFM dodges competitive bullet on Mexcian antitrust ruling. Illinois EPA fines UP for diesel fuel spilled in a wreck it didn't cause three years ago.
Week ending May 11, 2002
Providence & Worcester loss widens in 1Q02 from 1Q01. RailAmerica carloads up for April chiefly on acquisitions. Some thoughts on the sellers' market for shortlines. Restating leverage levels for GNWR and RRA. Storage charges increase on UP and BNSF. Railway Industry Agreement waiver request form offered by ASLRRA on-line.
Week ending May 4, 2002
The news this week is concentrated around just three items. Matt Rose's remarks to the shortlines in Orlando, couched in terms of his remarks to the PNWARS in Portland last Feb. The business of measurement is absolutely critical. I just spent several days with a shortline where a measured scheduled interchange will be the difference between excellent fiscal health and muddling through. Then there are first quarter results for GNWR and RRA. In both cases I've tried to drill down to the core business and in both cases it was a challenge. With any luck I got it right. Do let me know what you think.
Week ending April 27, 2002
Earnings Week was truly that with all the class 1s reporting at once. The constant thread was one of lower revenues and (mostly) still lower operating expenses. The good news is the hiatus in loadings due to the soft economy provided opportunities to make the railroads run better. The thrust of the accompanying text is on better operating practices, commercial positioning and trends as opposed to strict financial reporting. That's because WIR readership is comprised mostly of railroad managers and logistics professionals depending on reliable freight services. Knowing who's doing what and why can make a difference. At the end of the commentary is a chart comparing the major class 1s on many of the same metrics used in the blanchard.com Benchmarks Spreadsheet.
Week ending April 20, 2002
CP and FEC get favorable mention as asset plays in Barrons. GNWR reports March and quarterly carloads up. Two RailAmerica properties win ASLRRA awards. Class 1s to report 1Q02 earnings next week -- specifics on respective websites. CP and CN stock prices lead for the week. Comments on car repair and performance of TRN, GBX, WAB, GMT. Good marks for CSX Financial Supplement available for downloading as a PDF.
Week ending April 13, 2002
Alamada Corridor completed with benefits for UP, BNSF, Anacostia's Pacific Harbor Line. Matching Dow Jones sector performance to rail traffic by STCC. Potential impact on NS' stock price if utility coal shipments slow near-term. Genesee & Wyoming terminates Arthur Anderson relationship. RailAmerica March carloads up en toto, down on "same railroad" basis. Greenbrier posts loss after write-downs. Lessons for railroads in IBM Annual Report. Corrected dividends chart
Week ending April 6, 2002
Rail stocks this week got set back a bit from the gains of last week, but with dividends there may still be room for some growth. CN goes to court to challenge shortline application for access to CN customers. RailAmerican sells off 102 miles in Georgia. NS poised for turnaround, announces East Carolina Business Unit to operate 485 miles of light density track. My opinion on Amtrak long distance trains.

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