Blanchard Railroad Week in Review, Fourth 2012

The Railroad Week in Review:
Fourth Quarter 2012

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Week Ending December 21
November revenue-unit counts for GWR and RA. Once again, RA was up while GWR was down, the latter continues the trend of bad overhead coal comps in Ohio. Why I think large negative overhead coal comps will end in Feb. December will probably be the last month for this pair of reports as the STB has blessed the merger effective Friday, Dec 28. Class II and III merch carload comps down 1.3% YTD; Class Is down 1.5% YTD. I don't see signs of intermodal siphoning off boxcar traffic, but where small inventories rule intermodal has a distinct advantage.

Week in Review, December 14
RailTrends in NYC Monday another winner. RR presentations of note: KCS, FEC, UP, CN. A reader comments in the BNSF buy-back of the NENE in the context of paper barriers and what might be next. Pioneer Valley RR in Massachusetts as civic promoter.

Week in Review, December 7
CP wows 'em at the Plaza showing how they'll get to a 65 ops ratio in four years. Class I rev unit gains YOY thru mid-Nov nothing to write home about. Ditto Class II and III names. GWR as sanity check on the above.

Week in Review, November 30
Shortline metals vols off, iron ore vols not. Why? Nucor offers some reprieve. NS CFO John Rathbone on service performance; how short lines can help improve reported dwell times and car-miles per day. Short lines, the fiscal cliff and Obamacare. Is anybody minding this store?

Week in Review, November 16
Why growth rates will slow regardless of the Fiscal Cliff. How to improve revenue-variable cost ratios without touching revenue and what short lines can do to help themselves. Larry Kaufman on EP 714 and other delights. P&W reports another quarterly loss yet continues to trade at a premium ebitda multiple. Pete Claussen corrects my ethanol arithmetic.

Week in Review, November 9
Third quarter results from BNSF, RA, GWR. Where there's more rail-related stuff in the Berkshire Hathaway quarterly than just BNSF. Nebraska Northern redux; why shortline buy-backs may be just beginning. More signs of a serious ethanol slow-down and how it might affect the rails. STB acting more activist: paper barriers getting a new look and forced sale of two Berkshire accidental mini-short lines. Why a more hostile regulatory environment may not be good for the smaller short lines' health.

Week in Review, November 2, 2012
It's all about the UP Shortline Meeting this week. Three take-aways: (1) Know how your shortline franchise can extend UP's access to markets; (2) focus on lanes that have solid yields; (3) design service around customer requirements, turn the cars promptly and do it all safely. UP Investor Day themes. NENE Redux. GWR earnings call postponed until next Monday morning.

Week in Review, October 26
We wrap up coverage of the Class I earning season with CN, NS, CP in that order. CN shows how positive deltas in GTMs per train mile, cars per yard-switching hour, terminal dwell, trailing GTMs per horsepower, car-miles per day and train velocity can lower operating expenses and create happy customers into the bargain. NS did not have a good day, with negative deltas in most metrics -- revenues, revenue units, operating income, net income and earnings per share; the OR went up five points. (NS shares gapped down 4% at Wednesday's open in response.) CP brought a strong story with positive deltas across the board, including a two point drop in the OR. (CP shares gapped up 4% at the open.)
Some CP history on the D&H from one who lived through the early years. The saga of two hidden short line subsidiaries of recent Berkshire acquisitions became a bureaucratic snafu. BNSF buys shuttle-loader Nebraska Northeastern.

Week in Review, October 19
Changes at the top at CP; Harrison hints further at what op changes may be coming. CSX Q3 shows how to make money in a slow economy. UP sets all-time records. KCS does better than both in three key areas.

Week in Review, October 5
Why car-counts are more important to short lines than rate increases are to Class Is: operating income increases with more of the latter; flat volume is flat volume with no boost to the fare box. RailTrends 2012 comes to NYC Nov 1-2; why you should be there. Is the bloom fading from the ethanol rose? More frack sand coming to New York State but for use in -- wait for it -- Pennsylvania.

THE BLANCHARD COMPANY
2041 Christian Street - Philadelphia PA 19146-1338
Roy Blanchard.215-913-7740 mobile, royblan@icloud.com
Laura Blanchard, 215-985-1445, lblanchard@rblanchard.com