The Railroad Week in Review:
First Quarter 2015


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Week ending March 27
Class II and II railroad merch carload unit growth YTD leads Class I merch carload growth by 150 basis points; heat-and-eat doing OK, others not so much. Why commodity prices are falling and why merch carload vols may suffer as a result. Refiners seek straight-from-the-well crude oil, opening single-car opportunities for short lines. Frac sand vol growth continues even as vertical drilling slows. KCS lowers earnings guidance on reduced commodity vols, revs and Mex peso foreign exchange rates; GWR trims earnings estimates partly on slowing commodity vols in North America.

Week ending March 20
KCS specifies lead times for empty car placement for loading by car type; a useful service. Further rumination on crude by rail; chiefly, what happens when you run out of places to put it or transportation options. How to compare BNSF performance metrics with what Wall Street says in its notes about the Listed names. Squaring the BNSF 10-K with the Berkshire Annual; using QCS to tweak the commodity breaks. Noel Perry on the inevitable downturn in the economy; how short lines can use his Words

Week ending March 13
Comparing AAR Performance Measures for CSX, NS; CSX dwells up, train speeds down on 2% more vols. Indiana Rail Road 2015 capex plan is $17.5 million. Take-aways from Tony Hatch conference call, "Lower Oil Price Implications for NA Railroads, Suppliers." Continuing the Oliver Wyman "schedule paths, not trains" thread.

Week ending March 6
BNSF full year 2014 revenues increased 6 percent to $23.2 billion, revenue units increased 2 percent, and RPU gained a reasonable 4 percent; all-in, YTD revenue units through Feb are off one percent. I missed the 26th Annual CSX Short Line Workshop due to airplane follies and ice storms, but judging from attendance and content, it had to be yet another great success; CSX performance quarter-to-date disappoints. Why rails must make the jump from a cost-avoidance model to one that maximizes customer satisfaction by operating to plan and generating more revenue per RTM.

Week ending February 27
How Wabtec builds shareholder value from robust freight car parts business. Freight volumes slow YTD. GWR acquires Britain's Freightliner Group, Ltd. Pat Ottensmeyer becomes KCS President.

Week ending February 20
Kansas City Southern dodges the bullet. ShipXpress to hold annual users conference in Jax. Genesee & Wyoming reports North American revenue units for January. Pan Am Rail kit-bashes new Waterville transfer table
.

Week of February 13
Genesee & Wyoming 2014 fourth quarter consolidated (North America+Australia) operating income gains 20 percent to $113.5 million as revenues increase 6 percent to 415.6 million. Six of the seven North American Class I railroads post revenue-unit gains in FY 2014. Tony Hatch gleans good tidings from several industry conferences in Jan. The CSX Board promotes Oscar Munoz to President and Cindy Sanborn to EVP-Operations. In all, a satisfying week. I'd say there is a general sense of optimism and well-being about in the land, especially as we re-shore manufacturing and use more home-grown energy. Coal's not going away, crude oil and nat gas prices will find their own levels and short lines with natural niches will reap the benefits of considerable competitive advantage.

Week of February 6
How and why truck driver shortages are hurting grain-belt farmers west of the Mississippi. Genesee & Wyoming December same-store carloads up 14%. GE Transportation (RMI) announces 25th Annual Client Conference; ASLRRA head Linda Darr keynotes. Watco promotes three and announces terminal ops expansion in Kinder Morgan transaction. Tim Marsh joins CP as Chief Commercial Officer.

Week ending January 30
Why Canadian National is a financial powerhouse. Norfolk Southern disappoints, but the ingredients are there for improved results starting now.

Week ending January 23
UP's Jack Koralwski says to get on the UP network the move has to support reinvestment in the equipment. The combination of 10% rev growth and 20% ops income growth tells me it's working. CP's Hunter Harrison said it was the best quarter he's ever been associated with and the call's content shows how CP plans to repeat in 2015. At KCS, David Starling led a call demonstrating how and why the 2014 results will be a "springboard" to future gains.

Week ending January 16
CSX unleashes a remarkable number of record results for the 2014 fourth quarter; performance metrics showing improvement. Bloomberg explains why oil may take years to recover.

Week ending January 9
AAR Week 52 combined North American railroad revenue unit volume hits 37.2 million units, up 4.4 percent. How to split out crude oil out from AAR petrol products category. Why 2015 auto shipments are going to be up; how low crude-oil prices relate and where they will affect shortline volumes. More on the simplifying pricing theme; how short lines can use QCS data to cut through the fog.

 

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