Railroad Week in Review:
First Quarter 2004
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It's off to the races for a New Year and it looks like a doozy for the
rails. Comments on the safety culture -- or lack thereof -- at some
shortlines and passenger operations; a challenge to readers. Don Phillips
leaves the Post. GWR buys three shortlines from Georgia Pacific.
Robert Reich Redux.
Readers respond on safety. Shortlines as a whole running 4 injuries
per 200,000 hours compared to the Class Is under 2. Some do much better,
indicating to me it's attitude and leadership. Stock prices for the
industrials (heavy users of rail) surge. KSC wins a round in court.
STB rules Norfolk Southern coal rates to Carolina utility "reasonable."
Rail development Corp gains control of IAIS. Kudos for Nitttany & Bald
USDOT says the new trucking hours-of-service rules started Jan 4 but
really won't be fully pressed on any but the most egregious violations
until Mar 4. Direct and indirect effects; can the railroads compete?
North Shore's Todd Hunter on why they built the track-scale. GVT's Chuck
Reidmiller dies suddenly. GWR Dec and 4Q carloadings increase.
UP opens Earnings week with strong revenue growth on modest carload
growth. Overnite IPO pushes net income up 46% yoy; eps from continuing
operations drifted south by 7%. RRA selling its Chilean interests ("Ferronor")
to an affiliate of its Chilean partner for $18 mm cash and paper plus
$20 mm to wipe out associated RRA debt. RRA North American carloads
on same-store basis increase in-line with the Class Is yoy. CN and CSX
collaborate on instantaneous interline prices for carload shipments
moving over their networks. DM&E wins FRA approval of a $233 million
RRIF loan. Words to the wise re future Class I line rationalization
BNSF stepped to the plate with double-digit revenue growth in industrial
products and intermodal. CEO Matt Rose announced the twin goals of increasing
net income at twice the rate of revenue increases and requiring every
commodity group to cover its cost of capital. CSX posted strong revenue
and carload numbers but the accounting charges and continued high operating
expenses got the better of them. Similarly, accounting foibles clobbered
NS earnings. But railroad operating results based on revenue growth
and expense control were quite encouraging.
Canadian National proves once again that the carload business is alive
and well. For the quarter carload (ex-coal, intermodal) brought in 75%
of revenues, up from 73% in 4Q03. Canadian Pacific posts all-time record
for quarterly volume growth, up 4% with revenues up 10% before the currency
exchange rate (FX) charge. Kansas City Southern increased domestic revenues
for the fifth quarter in a row, up 3% on double-digit gains in ag &
mineral and automotive. Equity earnings from Grupo TFM sank 72% to $5.1
mm from $18.2 mm mostly due to the Mexican peso devaluation against
the US dollar. Summary chart for the Big Six Class Is. GWR reports this
week, RRA the 19th.
GWR reports solid results for quarter and year, announces 3/2 stock
split. Detailed table including carload data. UP dwell times rise, though
anecdotal evidence points to long-lasting remedies. RRA increases system-wide
loadings 10%, North American 6%, and NA same-railroad 3%. Earnings webcast
set for 1100 Feb 19. CN's Hunter Harrison sees Price Rupert on BC Rail
as overflow port for Vancouver.
Results of my Third Annual Shortline Review trip to Canadian National
HQ to review shortline trends past present and future. Annual progress
report from CN's Taschereau Transportation Center. RailAmerica reports
4Q03 and full year 2003 earnings. Tables.
Florida East Coast Q4 and full year financials. Table. Note particularly
the traffic mix between and among aggregates, automotive and intermodal.
Canadian Auto Workers union still out against CN, though Friday the
UTU settled with the GTW. Quarterly results comps for FEC, KCS, GWR,
RRA. Watco adds 30 miles in SE Texas and buys NA RailNet's Camas Prairie.
UP may miss 1Q04 $0.57 eps target thanks to lower trip plan compliance
and an unconscionable $30 mm jury award for an Arkansas grade crossing
accident six years ago. Read what the trial lawyers have to say about
the lucrative business of suing railroads. CN strike continues; traffic
down 9% yoy for the week ending 2/27. Tom Owen tapped as SVP - North
American Rail at RRA. GWR stock split moved up 3 days to 3/15; record
date (2/27) unchanged. Spain's 2004 rail capex program second only to
China. Some shortlines still missing the point about contribution vs.
revenue. Part I of a series.
Feb carloads for GWR and RRA are up handsomely with North American same-railroad
results increasing at a run rate more than twice that of the Class Is.
The CN strike drags on and some grain shippers say the substituted truck
transportation costs half again as much as rail. BNSF changes marketing
line-up. Most rails emerge from Wednesday's stock slide with less of
a hit than the DJIA. Table. More on why the carload guys are hurting.
Tony Ingram retires
from Norfolk Southern to take up the reins as Chief Operating Officer
for formal rival CSX Transportation, reporting to Mike Ward, CEO and
Chairman. Strikers at Canadian National have ratified new labor agreement
and are scheduled to return to work on the first daylight shift Saturday.
How changes in revenue and expense can affect contribution. A modest
proposal for rethinking the shortline compensation model. Rail car supply
considerations as lumber prices reach new highs.
strikers are back at work with what promises to be little harm to the
earnings picture for the quarter or year. The trend is toward better
results with fewer non-op personnel. Sounds good to me. Excerpts from
Delaware Valley Regional Planning Commission's position paper on CSAO
for April 2 hearing in Trenton. Some NJ Shortlines in the Phila Shared
Asset Area still don't get it. Watco Companies' Annual Operating Plan
gets high marks. BNSF Customer Notification System proactively alerts
customers to potential delays en route and revised ETAs.