The Railroad Week in Review:
Fourth Quarter 2014

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[No week in review for December 26 - Christmas]

Week ending December 19
Genesee & Wyoming November carloads in North America increased nearly seven percent year-over-year. Why the sudden southward drift in crude oil prices has ethanol players scratching their heads. Economist and financial blogger Nouriel Roubini on the future of automation and work; possible railroad ramifications. Kansas City Southern gets a mixed message from legislators in Mexico.

Week ending December 12
The ISA thread continues: Do the local Class I ops guys even know ISAs exit? Are all short lines measuring Class I ISA compliance and reporting same to their Class I shortline reps? Where pre-blocking makes sense and where it doesn't. BNSF says it's getting a handle on making the grain trains run right; shortline country elevators in Canada say they're still getting short shrift. Could it be the cars aren't turning as well as they do at Class I stations? NS's Don Seale on Q4 outlook; what it means to short lines. Financial Times says US oil drillers face "endurance test." How short lines can sort out the strong from the weak on their properties. Tom Hoback retires in six months.

Week ending December 5
Why last Friday's oil price slide clearly spooked railroad and railroad equipment traders; where we go from here. The Interline Service Agreement push is on once again, and it's the commercial side that's pushing the idea. Notes from RailTrends on the Quality of Service question. GWR acquires Pinsly Arkansas properties for $40 million.

[No week in review for November 28 - Thanksgiving]

Week ending November 21
NS to acquire ex-D&H Schenectady-Sunbury from CP; continues rights over CP to Mechanicville connection with Pan Am Southern. RailTrends Day One highlights. Shortlines and NS convene on carload opportunities at Brosnan Forest. P&W third quarter results.

Week ending November 14
BNSF 3Q revenue units off one percent though industrial products scores 5% gain even without crude and NGLs; revs hit $5.9 billion. GWR October same-store NA carloads up 4%; including RCPE up 9%. Shale driller activity possibly slowing down in the face of lower oil prices; how cheaper oil both helps and hurts the rails. ISM manufacturing index hits 59.0 in Oct; non-heat-and-eat merch carload growth still mired in the low single digits. CSX offering buyouts to 300 most in Jax HQ.

Week ending November 7
Genesee & Wyoming's third quarter NA revenue units increased 9.4 percent year-over-year. Continuing the theme of the Class disconnect between the walk and the talk, here is another recent and rather egregious example. Union Pacific's Investor Day presentations from last Wednesday provide excellent guidance for short lines. Trinity whistle-blower lawsuit fall-out. CSX whacked the plaintiff's bar soundly in asbestos law suit. At BNSF Merril Lieb assumes the duties of VP, Interline/Shortline Development. This just in: Bloomberg reports, "Activist investor Bill Ackman said Canadian Pacific Railway Ltd. may pursue a rival to one-time target CSX Corp. " No names were named, but one has to be living on another planet not to get it. Says Ackman, says Bloomberg, ""I think something happens. Hunter believes that pro-competitive railroad mergers will be allowed to happen by regulators." NSC shares were up 2% to $113 by 1100 NY time.

Week ending October 31
What BNSF is up to and why and how it helps short lines. Examples of how uneven Class I operating practices harm shortline customers. Growth and promotions at Iowa Pacific/Texas.
GWR 3Q results encouraging. Details and analysis here next week.

Week ending October 24
Class I earnings results compared. CP revenue up 9% on revenue units up 2% (the smallest delta of the group). Hunter Harrison holds forth with his views on North American transportation policy and to clarify some aspects of the CP-CSX conversation. Canadian National walks away with the honors in six of my seven key results measures. NS Total revenue up 7% on revenue units up 8%. UP has best-ever revenue, operating income, operating ratio and earnings. Total revenue up 11%, best percentage gain of the US Class Is. The common theme was congestion at yards and choke points hammering system velocity and crew/loco turns. Every road gave specific examples of where and what they are doing to eliminate same. We should be content if vols increase 2-3% in Q4. Yet clearly there exist significant opportunities for Class II and III roads to add value to the transportation proposition with their first mile/last mile customer service advantage.

Week ending October 17
CSX opens the third quarter railroad earnings season with a seven percent revenue-unit gain, helped by nine percent more merch carloads, seven percent more coal, and five percent intermodal. KCS revenues for the quarter top $678 million, a record, up nine percent, on record volumes up five percent to 595,400 units, and ops expense up just six percent, yielding $448 million of operating income. GWR September carloads for North America increase 5.5 percent to 145,447 units; of that, the four-month old Rapid City Pierre & Eastern brings on 5,101 cars. The scuttlebutt on CP+CSX rumors. RailTrends 2014 looks like another SRO performance.

Week ending October 10
Why this week's wide stock market swings ought to grab the attention of every railroad planner and operator; the start of a worrying trend? Share buy-backs have boosted railroad earnings per share and heightened eps numbers have boosted p/e multiples. What ever happened to Fair Value and margins of safety? Shippers say they see more use of rails despite service wobbles. Grains of salt are in order. More news from RailTrends 2014.

Week ending October 3
CP announces D&H sale agreement but not to whom; Harrison pulls no punches in his opening Investor Day remarks. Most refreshing. NEARS Fall session a resounding success with emphasis on capacity. Mexican Govt may relent on reform measures that could be especially harmful to KCS. Bill Burt corrects my NKP history from last week.






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