Railroad Week in Review:
Fourth Quarter 2004
Available in Adobe
Acrobat format only. You will need
the free Adobe
NS taps Wick Moorman President, reporting to David Goode who retains
Chairman and CEO titles. Six others move up -- all of them excellent
calls. RailAmerica cuts annual interest payments by $20 mm by paying
down, eliminating and rearranging some very expensive debt. RRA takes
$12 mm write down for E&N on Vancouver Island; looks to close sale in
1H02. No suitors named. Why greater transparency is still needed non-public
shortline financial reporting. Finger Lakes' Mike Smith rebuts my aggregates
commentary. Kel McKavanagh on covering coast of capital by commodity
Cost of Capital continues to loom large on the railway scene. Even as
the DJIA shed about 2% to close at 10,055 on Friday the rail group continued
to outperform. Observations from this week's the fall meeting of the
North East Association of Rail Shippers (NEARS). BNSF sheds 288 miles
of branchlines in Illinois and New Mexico to two shortline operators.
GWR selects RMIís RailConnect for the three ex-Georgia Pacific railroads.
KCS gains authority from Mexico's FIC to acquire TMM's interest in the
TFM. North Shore Rail Group land a big one. Kaufman continues the thread
on cost of capital.
Shortlines win $3,500 per mile per year tax credit for track maintenance
and improvement. Infamous 4.3-cent per gallon fuel tax reduced two cents
this year and eliminated in Jan 2007. September AAR carloads up 4%;
RRA and GWR do better on a percentage basis, but are shortlines losing
share? Some observations on track maintenance accounting practices from
a shortline pro. How a shipper shunning one railroad for poor service
can impact all other railroads regardless of service quality.
NSC was first up for Earnings Week and set a very upbeat tone. UNP came
out second with a less exciting story but with much meat behind the
curtain. A first-hand, in-depth look at RailAmerica. Shortlines and
investors please pay particular attention to the shortline elements
in the NSC and UNP results couched in terms of the RRA processes and
Third quarter results: BNSF operating income up 31% to $565 mm; CN increases
freight revenues by 21% while holding operating expense to a 17% gain.
RRA reports loss of $30.6 mm from continuing operations. CSX operating
revenues up 6% on no change in volume. KCS reported sales up 12% on
7% more volume with all commodities ex-coal up double-digits. Highlights
from the BNSF shortline meeting.
CP's Fred Green to EVP and Chief Operating Officer. CP Q3 sales up 9.4%,
with five of seven commodity groups reporting double-digit revenue gains.
GWR operating income up 43.4% yoy.FEC Florida East Coast Railway (FECR)
really got hammered by the consecutive hurricanes. Going into Sep railway
revenues were up 11% yoy yet the quarter revenue closed up a mere 3.4%
to $46.3 mm. Table comparing all Big Six Class Isí third quarter performance
with the usual emphasis on merchandise carload revenues.
Rail stocks beat the market YTD. A visit to KCS and a guided tour of
their forward-looking Management Control System. BNSF hosts annual Financial
Analysts meeting in KC. RRA and Railinc debut web-based TMS in North
The Canadian Class Ones have structured three new network initiatives
that will improve railway transit times and asset utilization in British
Columbia, Alberta and Ontario. Notes on the new NS-CP-CN arrangement
improving rail service between Eastern Canada and the US Northeast.
CSX on track to deliver the best returns in five years. Jason Seidl
of Avondale Partners opened his coverage of RailAmerica with a Market
Outperform rating. Table of Regional Railroad and shortline holding
company comps for 3Q04.
- Week Ending
Thanksgiving week. No Week in Review. As you bow your heads for the
table grace on Thursday, please give thanks for the good life we lead
and pray for the health and safety of those less fortunate than we.
Former ASLRRA President Bill Loftus passes away at 74. KCS won the needed
STB approval for control of the Tex-Mex. Some thoughts from CP's Rob
Ritchie on taxation vs. infrastructure investment. How cost of capital
and ROIC drive infrastructure decisions. Real-life examples from BNSF
and the UP.
The land was awash in property sales this week as CSX and RailAmerica
sold off non-core enterprises. Class 1 growth continues, writes Bear
Stearns analyst Tom Wadewitz. Morgan Stanley's Jim Valentine reports
that truck rates continue to climb. CN and UP have identified alternate
interchange routes that avoid Chicago. The official publication of the
Railway Association of Canada (RAC), has always been very pro-shortline
and the Fall 2004 number is no exception. Railroading in the abstract.
Third World comparisons redux.
Look for more churning in shortline ownership in 2005. There is no argument
that railroad shipment volumes are up; interpreting STB Performance
Measures. More on the shortline tax credit. November carloads up at
GWR and RRA. GATX Rail acquires the remaining interest in Locomotive
Leasing Partners from EMD. Canadian Pacific wins step one in Elk River
coal arbitration. KCS to acquire TMM's 51% voting interest in the TFM
Union Pacific (NYSE: UNP) gapped up $2 at the open Tuesday and closed
up $3.55, 5.6%, for the day. But maybe it's time to dust off some of
the Fallen Flag play-books just the same. Barron's: "Burlington Northern's
on the Right Track." Norfolk Southern led the rails in shrinking its
shorts. Providence & Worcester's unique approach to property sales;
where's the free cash flow? Relative importance of the Big Six North
American Railroads' single-car commodity revenues. Table.