WIR 2019, Fourth Quarter

[No Week in Review December 27 — Christmas break]

Week ending December 20
The 45G tax credit deal appears to be reached; the bill still has to make its way through further legislative steps but ASLRRA’s Baker seems confident. New “RRIF Express” program expedites long-term, low-cost loans for short lines and regionals. Union Pacific completes mandated PTC installation; why PTC is an adjunct to PSR. UP streamlines marketing and sales around car type and service design more than strict SCCs.

Week ending December 13
PSR and how it relates to the railroad business in general; how PSR creates a railroad product better suited to customer supply-chain needs. Celedon trucking declares bankruptcy; a sign of the times as companies to minimize inventories, make smaller and more frequent shipments, and use less long-haul freight. Sorting out the AAR Chemicals and Petroleum Products commodity breakouts in their carload data.

Week ending December 6
A worrying crop report for railroads in the northern plains. Oliver Wyman’s Rod Case says merchandise carloads could be the canary in the railroads’ coal mine. Union Pacific customers realize benefits from PSR; a cautionary note for short lines on locomotive fleet management. The danger of share prices growing faster than earnings.

[No Week in Review November 29 — Thanksgiving Break]

Week ending November 22
Chart showing CSX and NS rates of change for STCC 262 revenue units and revenue per unit over time; some conclusions. Shortline operator R. J. Corman Railroad Company wins three of the five ASLRRA 2018 outstanding safety performance awards; thumbnails of their short lines. RailTrends 2019 observations and conclusions. Canadian Pacific buying the 481-mile Central Maine & Quebec Railway (“CMQ”) from Fortress.

Week ending November 15
Kansas City Southern sets new capital allocation policy for splitting available cash between “capital projects and strategic investments” — seeking alpha writer marks them down. Best days at CN are not over, in spite of what seeking alpha writer says. Why NS franchise in the growing southeast is not an automatic win; 2019 Proxy statement reveals management incentives. Pinsly’s Florida Central and the Rule of 100.

Week ending November 8
BNSF third quarter revenues slipped two percent to $6.0 million vs. a year ago; revenue units of 2.6 million were down less than three percent. The Four Quadrant economic outlook and how short lines can use it. Shortline caveats re AAR Week 44 merch carload trends.

Week ending November 1
Canadian Pacific held its “Connections” shortline and transload conference in Calgary this week; some 100 individuals representing more than 50 different companies were on hand. Pinsly Railroad Company is selling its three Florida properties to the Pennsylvania-based Regional Rail; the three Pinsly properties are the Florida Central (FCEN), Florida Midland (FMID) and the Florida Northern (FNOR). More on block swapping; why it worked and why it was killed. FreightCar America and Wabtec results reflect slowing use of freight car transportation in North America.

Week ending October 25
Canadian National finishes its third quarter with total revenue of C$3.8 billion, up 3.9 percent, on 1.5 million units, unchanged; RPU gains 4.1 percent to C$2,471. Norfolk Southern’s total revenue is down four percent to $2.8 billion on 1.9 million revenue units, down six percent; merchandise carloads 622 million units, including automotive, down four percent. Canadian Pacific posts record Q3 total revenues of C$2 billion, up 4.2 percent, on 711,900 revenue units, up 1.4 percent; system RPU was up 2.8 percent.

Week ending October 18
CSX total third quarter revenue units dropped five percent to 1.6 million; merch carloads including auto came in unchanged at 683,000 units. Union Pacific reported total Q3 revenue of $5.5 billion, down seven percent, on 2.1 million revenue units, down eight percent. Kansas City Southern total Q3 revenue increased 7.0 percent to $748 million on 598,900 units, unchanged; RPU gained 6.6 percent to $1,192 per revenue unit. Further comments on Precision Scheduled Railroading and its origins.

Week ending October 11
PSR on batch vs custom processing; Amazon parallel, shortline examples. Further NEARS observations: Professor gives PSR short shrift; need examples of CSX carload successes.

Week ending October 4
More than 250 souls came to the NEARS Fall conference in Burlington, Vermont this past week. Herewith some initial thoughts. Mike Miller, GWR President for North America, zeroes in on the changes coming to GWR as a result of the pending acquisition by Brookfield Infrastructure Partners. Arthur Adams, CSX VP for Sales and Customer Engagement, says his charge is to find out what it will take to win more merchandise business and translate customer needs into product design. Why the railroads need an attitude adjustment to make PSR work.

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