WIR 2019, First Quarter

Week ending March 29
GWR acquires two Indiana short lines to perpetuate its long-standing “contiguous railroad” model, stitching together formerly independent operations and its existing network. Greenbrier gets orders for 3,800 new fright cars — chiefly tank cars, auto racks, and covered hoppers; tank cars and covered hoppers easily fit the non-cyclical category for chemicals, energy, and grains. Not sure about auto racks.Tony Hatch reports from SEARS.

Week ending March 22
CSX is in flux; opportunities for short lines abound. CN looks for growth in shortline carloads; managing customer behavior. Thoughts on the Total Addressable Market (TAM) concept for short lines.

Week ending March 15
CSX holds its 30th Annual Shortline Workshop Mar 3-5; CSX non-Class I railroad connections touch some 22 percent of CSX revenue units. AAR reports February vols — 2.1 million conventional carloads and intermodal boxes, down 1.8 percent; eight of the 20 AAR carload commodity categories post YOY gains; why the two year trend is perhaps of greater value. GWR Jan revenue units increase 3.6 percent excluding 2,442 cars from shortline leases in Canada; GWR appears to be in play, seeking either buyers for the whole entity or for equity partners.

[No Week in Review March 8]

Week ending March 1
BNSF 2018 total revenue $23.9 bn, up 12% (BNSF doesn’t do quarterlies) on 10.7 million loads, up 4%; operating income increases 7%, OR gains 140 bips to 67.3. The economy continues to show signs of slowing — chart; why short lines need to pay attention.

Week ending February 22
AAR Revenue Units for Week 7 (Feb 15) increase a mere three-tenths of a percent year-over-year; merch carloads lead the pack, up nearly two points. More on the dangers of “financialization.” Why PSR isn’t really anything “new.

Week ending February 15
Norfolk Southern Investors Day gets rave reviews from The Street — many superlative accomplishments and goals; why attaining those goals could be challenging. With the spring meetings season now nearly up on us, it’s time to ponder questions to put before the presenters; two suggestions. ISS for short lines?

Week ending February 8
GWR adjusted Q4 net income $55.6 million, up 14.3%, on consolidated revenues of $575.6 million; total revenues in North America (common carrier freight, contract operations, other) increased 5.6% to 338.0 million. AAR revenue units were up a mere 1.2% through Week 5 (February 2); Week 5 by itself has total vols down 9.2%. Anacostia Rail Holdings and Global Information Systems co-host the second “Short Line Railroads – GIS Opportunities Workshop” in Overland Park, Kansas, Jan 30. KCS appoints Sameh Fahmy to EVP, Precision Scheduled Railroading.

Week ending February 1
CN wraps up the official Class I 4Q earnings call season Tuesday; freight revenues increase 17% to C$3.6 billion on 1.5 million revenue units, up 5%. Tom Wadewitz at UBS tells us, “Week 4 industry-specific trends are opaque” and why. Mantle Ridge sells 2.8 million of its CSX shares at $64.42 each for a $38 billion payday; another block is pending. The auto business could be softening in 2019; Daniel Ruiz of Blinders Off Research, a specialist in auto trends, tweets. RJ Corman reorganizes Commercial Development team.

Week ending January 25
Canadian Pacific reported fourth quarter revenue of C$2 billion, up 18% on a 5% increase in revenue units; system RPU gained 13% to C$2767. Union Pacific freight revenue increased 6% to $5.4 billion on 2.2 million revenue units, up 3%; system RPU gained 2% to $2403. Norfolk Southern revenue gained 9% to $2.9 billion on 2.0 million revenue units with a 5% RPU gain.

Week ending January 18
CSX opens the 4Q2018 earnings season with total revenue units up three percent in the quarter; Foote says the merchandise business is the area that most benefits from the change in the operating model. KCS reported record fourth quarter revenues of $694 million, an increase of five percent, on 588,200 revenue units, essentially unchanged; continuing its PSR initiative, using those characteristics and disciplines best suited to the KCS network. GWR December same-store carloads increase 8.4 percent. Watco initiates short-haul frac sand shuttle service in west Texas.

Week ending January 11
Union Pacific names Jim Vena Chief Operating Officer; shares jump several points after-hours on the news. Delaware Lackawanna Railroad rings up its second consecutive year of record carloads. Seaview Transp Co in Rhode Island benefits from $3 mm federal grant. Watco and Oaktree Capital create strategic partnership. Twitter thread on auto sector.

Week ending January 4
The focus this year is on the economic drivers of railroad success or failure; looking for the railroad and commodity trends and events that will determine the direction of the shortline industry. Are we getting to the point where earnings growth depends more on rate hikes goosing ORs, or on share buy-backs goosing earnings per share, not because we’re moving more freight? Trends from the just-released AAR Railroad Facts 2018 edition for revenue ton-miles, operating revenue, and operating income; more money, less work?

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