Railroad Week in Review:
First Quarter 2003
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ending March 29
CSX announced a newer, kinder fuel surcharge program this week, but
did not say whether shortlines may pass it on. Norfolk Southern's 2002
Annual Report is worth a very close read. BNSF upgraded by Bear Stearns
while UP warned 1Q03 earnings may not meet earlier estimates. RailAmerica
and Genesee & Wyoming report Feb carloads. The former puts a sharper
pencil to its definition of Free Cash Flow.
ending March 22
The war news increases watchfulness on North American railroads. GWR
bought Utah RR in 3Q02, not 2Q02 as previously reported. Smartmoney.com
lists CSX as a "foxhole" stock. RRA's Deutche Bank slides
helful three ways. Why information about a shipment is as imporant as
the shipment itself. A reader sends in a shortline sale caveat.
ending March 15
Genesee & Wyoming operating income up 46% for the quarter and 39%
for the year. Mike Mohan takes reins in Australia. Florida East Coast
Railway a consistent performer while holco's real estate results vary
from period to period. NS hosts analysys at Brosnan Forest, posts slides
and remarks at www.nscorp.com. Shortline list gets shorter and is likely
to keep doing so.
ending March 8
The Washington Post's Don Phillips interviewed outgoing STB Chairman
Linda Morgan, who had a few choice words about the state of the industry.
I really like the way she drills down in her presentations and she pulls
no punches here. RailAmerica reported results for the quarter and year
and it's good news and bad news. There's more meat here than a conference
call usually gets in WIR, however there are a lot of lessons on a lot
of levels for shortlines, shippers, and even Class I railroads. Notice
how Australia's poor showing really knocked the stuffing out of a pretty
good year in North America, all things considered. To my mind RRA income
statements frequently have too much noise below the line and in this
report it eats up 85% of the quarter's operating income and 97% of the
ending March 1
2003 North American commodity carloads were even with Jan 2003 vs. AAR
commodity carloads off a point and a half. Adding back changes in bridge
and intermodal traffic RRA's total was off 3.5%. Most of the bridge
traffic is low margin and subject to diversion anyway. Elsewhere, changes
in US tourism to Europe, a shift away from sole-source supply, and a
tightening of natural gas prices may help the carload business. USX
put selling the Transtar properties to the Apollo group on hold. CSX
completes a highly successful first year of remote control operations
in more than 60 locations.
ending February 22
like the new STB Chairman is going to be good for the induatry. AAR
traffic reports offer some encouragement for those in the carload freight
business. CBS "Market Watch" on the railroads "perking
up." UP's Koraleski to address Prudential conference -- don't miss
it. FEC results improved for quarter and year. Using "buy-writes"
to generate income and protect profits by fixing an exit point and price.
More on Amtrak loco failures.
ending February 15
with the CN in Montreal was most instructive. The tone is one of, yes,
we've done a lot of things right, however, things done right just open
our eyes to still other things we need to do better. Shortlines, shippers
and shareholders are sure to benefit. North Shore's Todd Hunter sends
periodic Success Letters to his class 1 counterparts. We excerpt one
of them here. Amtrak's locomotive maintenance program needs attention.
Three maintenance failures in one trip is a bit much. A phone call asking
for comment was not returned.
ending February 8
week's Table of Compararative results for the class 1s has a very definte
carload focus to guide shortlines as they shape new relationships for
the coming year. More revenue per car to the class 1 can mean more revenue
for the shortlines IF they can add value to the service. Larry Kaufman
responds to some of my remarks on this topic. Also a RailAmerica investor
takes umbrage with my analysis. Finally, car hire deprescription's full
force is upon us and RMI's Pete Kleifgen offers up some enlightning
ending February 1
now heard from the Big Six class 1s plus KSC and I'd say everybody did
well considering. Note we're following the CP's lead for comparability
and leaving out the one-time debits and credits that take away from
core results. The common thread is that better service earns better
prices. In case after case we find expenses remaining about the same
yoy while quality service in the eyes of the customer grows the numerator
of the Operating Ratio faster than the denominator.
ending January 25
CN, and UP all had positive things to say about the carlaod business
in general and the outlook in particular. Of particular note CN is taking
the best aspects of the merchandise carload operating model and applying
them to the intermodal business. UP's Jack Koraleski talks about a "portfolio
of measures" to gauge performance. Next week it's CP, NS, CSX and
KSU in that order. Stay tuned.
ending January 17
season is upon us. Who's reporting when and what can we expect? Further
observations on making the carload business work better. December carloadings
for GWR and RRA. BNSF pays regular quarterly dividend April 1 and adds
30 mm shares to buy-back program. KCS makes marketing and sales changes.
ending January 10
the theme of maximizing profitability in merchandise carload lanes.
Camas Prairie experience shows why rail banking is a winning idea. Maryland
Midland's Paul Denton gets air time on CNN. Innovative "Bags on
Boxcars product" from BNSF generating new business; implications
ending January 3
stock performance in 2002 was not barn-burner, but it was a heck of
a lot better neighborhood than the S&P 500, writes Tom Murray. DM&E
hits a "home run" as Feds overturn South Dakota's "eminent
domain" land-grab. Burkhardt's Montreal, Maine & Atlantic opens
for business 1/9. CSXT shortlines queried on ISA performance. Relationships
between and among
merchandise carload concentration, traffic density, and operating profits.