Blanchard Railroad Week in Review, Second Quarter 2009

The Railroad Week in Review:
Second Quarter 2009

Current Issues
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Week in Review, June 26, 2009
Three take-aways from my recent short line visits. Iowa Pacific's AZER to add 12 miles of new track and a bridge to access Phelps Dodge copper mine. GWR shutting down Huron Central, reduces guidance and brings in nearly $100 mm in new capital from sale of new shares. Morgan Stanley on shifts in auto biz; short line caveats from me. CP coal and export grain shortfalls not likely to impact short lines.
[No Week in Review for June 19]
Week in Review, June 12, 2009
An instructive exchange about creating what marketers call “Unique Selling Propositions” or “moats” to use Buffett’s analogy. The chemicals link: GM bankruptcy, DuPont receivables and short lines. Unsing the ASLRRA website’s shortline commodity-connection search engine to see who's exposed where. Short line tidbits: a tourist rail goes full-time, Cleveland Commercial adds track, Kyle buys out its lease, Mississippi having second thoughts on CN line sale to scrapper, E&LS gets its paper biz back.
Week in Review, June 5, 2009
Norfolk Southern Investors Day highlights, take-aways for short lines. Why a company's share price trend is your friend. Providence & Worcester posts yet another losing quarter.
Week in Review, May 29, 2009
Notes from NARS on the economy and re-regulation. The data points are not encouraging. A worst case for short lines. Jim McClellan PowerPoint on "Lean and Green" railroads.
Week in Review, May 22, 2009
Signs that private enterprise may be pushing back against some government financial-engineering. Tightening credit card and commercial loans putting pressure on short lines with less than stellar cash flow? RRIF loans are up. Larry Kaufman on the folly of buying business with low rates. NS chief tells stockholders it's no longer business as usual and how that outlook is making NS stronger. CN sells 252 miles in Mississippi to A&K partnership.Cherilyn Radbourne on the latest trends at CN and CP. Arnold McKinnon passes at 81.
Week in Review, May 15, 2009
Art Cashin on "us vs. them" in DC; signs the rails may be spared. Tea leaves pointing toward a turn in grains, fertilizers and farm machinery. GWR April loads off 6% yoy and 12% from Mar 2009. Same store loads dip 21%, acquisitions recover 2/3 the loss. Steep drop in new-railcar builds anticipated. Modoc Northern stumbles. Shortline opportunities to improve loco fleets and T&E staffing as Class Is trim resources.
Week in Review, May 8, 2009
The transcript of Warren Buffett's extensive March 9 interview on CNBC is now available at cnbc.com. Herewith two tidbits and how they link to the merchandise carload sector. Why we're not out of the woods yet and how the unemployment rate can drag out the recovery. Brian Holtz on the short line benefits of making fixed costs variable. SRNJ gets a $million to fix 12 miles of ex-PRSL track. UP 844 in Ogden this weekend.
Week in Review, May 1, 2009
First Quarter results and commentary for BNSF, CP, GWR, KCS. Common themes: A sorry, down-double-digit quarter; damage control by doing more with less, making fixed costs variable. Lessons for short lines. Summary chart.
Week in Review, April 24, 2009
Canadian National leverages what CEO Hunter Harrison calls “outstanding operating performance” into some powerful lessons on how to run a railroad at a lower cost by doing things smarter. Norfolk Southern posts a miss on what CEO Wick Moorman says were “uncertain business conditions.” Union Pacific turns a 21% drop in revenue units and a 22% revenue decline into mere 15% drop in operating income by matching assets to volumes and making fixed costs variable.
Week in Review, April 17, 2009
CSX opens Earnings Week beating eps estimates by a dime or 20%; how short lines can hop aboard. P&W once again uses property sales to turn an operating loss into a bottom-line gain; ops ratio remains well north of 100. GWR first-quarter revenue units up 13% on acquisitions; same store car counts drop. FWWR installs web-based dispatch system to facilitate further growth.
Week in Review, April 10, 2009
Higher fuel prices coming? How short lines are helping the energy story. Notes from the Norfolk Southern short line meeting at Brosnan Forest. Short line success stories from Pennsylvania, Michingan, Washington. Art Cashin on why nobody came to the Treasury auction -- a caveat for short lines. New York state representative advocates state take-over of CSX right of way?
Week in Review, April 3, 2009
Cherylyn Radbourne of Toronto’s Scotia Capital recently held court with Canadian Pacific CFO Kathryn McQuade; excerpts of the Scotia note herewith. Union Pacific has asked the STB to “determine the extent of the common carrier obligation to quote rates for new, lengthy chlorine movements; shortline implications per ASLRRA's Dave Mears. The STB has determined that the Class I railroad average rate of return on net investment increased to 11.2% in 2008 from 10.1% in 2007; NS top wins top honors at 15.2%. Valuing railroads on total return basis. Chop Hardenburgh on recent New England developments. The eight high hurdles between you and stimulus money in NY. Outlook for GATX and by extension other car suppliers flat. Kaufman on how the AIG bonus tax decision could weigh on railroad legislation.

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