The Railroad Week in Review:
First Quarter 2003


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  • Week 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.
  • Week 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.
  • Week 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.
  • Week 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 year's.
  • Week ending March 1
    RailAmerica's January 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.
  • Week ending February 22
    It looks 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.
  • Week ending February 15
    A day 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.
  • Week ending February 8
    This 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 observations.
  • Week ending February 1
    We've 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.
  • Week ending January 25
    BNSF, 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.
  • Week ending January 17
    Earnings 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.
  • Week ending January 10
    Continuing 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 for shortlines.
  • Week ending January 3
    Rail 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.

 

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