Railroad Week in Review:
Third Quarter 2017
Issues. Available in Adobe Acrobat format only. You will need the free Adobe
Week ending September 29
Schwab's Liz Ann Sonders on why pay attention to the "Smart Money" and "Dumb Money" Confidence indices; not said is that rail share prices may be getting ahead of themselves. FTR's Noel Perry on why the changing economy is likely to create long-term challenges: "As the economy and the supply chain becomes more efficient and more digitized, it becomes less reliant on transport needs;" WSJ jeans graphic. Ted Prince, Chief Operating Officer of Tiger Cool Express, Rule of Thumb -- you can offer a 5-15% discount where intermodal dock-to-dock transit time is truck plus a day; how Class Is work against themselves in the carload sector. Railway Equipment Finance 2018 at La Quinta Mar 4-7.
Week ending September 22
Why the tea leaves point to a return of railcar volumes of metals with a focus on steel; insights from beyond the mainstream press. Outlook for domestic and export met coal; how short lines can capitalize on what's still there. Charts.
Week ending September 15
Annual KCS Strategic Partners in Kansas City, more than 200 souls in attendance; Mexico, petroleum products, and carloads the hot topics. Regarding changes at CSX and criticisms thereof; why Hunter's coming to CSX will benefit both CSX and NS. RailTrends tickler for November.
Week ending September 8
Why RPU means more than revenue units when it comes to keeping railroads profitable; whereas intermodal has grown at the expense of coal, most everything else (where short lines live) remains flat. Schwab upbeat on economy, Barron's less so; Grant's confirms autos trending down. CSX service on the mend; ideas short lines can use to help speed the recovery.
Week ending September 1
The benefits of going to see the people; sanity-checking what makes short lines work best. CSX produces 19-page PowerPoint that describes the Precision Railroading measurement changes; drawing conclusions about how they will affect connecting short line relationships. Hurricane Harvey and how the railroads are coping; far-reaching effects.
Week ending August 25
There may be glimmers of improvement at CSX; however, tales of doom and gloom still abound. CSX has changed the way it measures velocity, dwell, and cars on line; how its new scores compare with the AAR standard. Wells Fargo note suggests housing market improving; AAR lumber carloads up only 40 basis points year-to-date, but it could have be worse. CP ramps up Dedicated Train Program (DTP) for the the 2017-18 crop year, now handling more than 75 percent of the grain moving on CP. CN hauls record 21.8 million metric tonnes of Western Canadian in 2016-17 crop year, 7% more tonnage than the prior three-year-average. Short line take-aways.
[No August 18 issue]
Week ending August 11
BNSF second quarter 2017 revenues increase 15% to $5 billion on 9% more revenue units and 5% more RPU; merchandise carloads increase 8%. CSX follies continue -- why I suspect local management is measuring the wrong things; a sampling of customer complaints.
Week ending August 4
CSX service irregularities, Hunter's response, my take. Genesee & Wyoming's second quarter results; why GWR compares its mix changes with the Class Is' and how you can do it for your railroad. Why I see as the direction of the shortline industry tending toward more non-fungible bulk commodities and away from more time-sensitive, higher value goods; what can be done to get back into the higher-vale business.
Week ending July 28
Canadian National Q2 total revenue is C$3.3 billion, up 17%, on 1.4 million revenue units, up 14%; of seven major commodity groups from ag products to coal to intermodal, five posted year-over-year volume gains. Norfolk Southern posts $2.6 billion Q2 total revenue, up 7%, on 6% more revenue units; merchandise commodity vols off nearly a point, with all but metals/construction in the negative column. Is frac sand a short, and if so, what short lines can do to prepare; a huge divergence between capacity and margins.
Week ending July 21
CSX leads off the second quarter earnings season with total revenue of $2.9 billion, up 6%, on 1.6 million revenue units, up 2%; excerpts of Hunter Harrison comments from the Q&A. Canadian Pacific total revenue increases 14% to C$1.6 billion; total system revenue units up 8%; merchandise carloads up 11%. Union Pacific reports $5.3 billion total revenue, up 10%; Industrial Products group the strongest merchandise group gainer, KCS Kansas City Southern reports record second quarter revenues of $656 million on revenue units up 6%; RTMs gained 19% against GTMs up 15%. Elsewhere, Genesee & Wyoming same-store rail volumes increased 3.3% in June. Rio Grande Pacific re-brands its dispatching services from Nebraska Central Dispatch to Rio Grande Pacific Dispatch. Wolfe Research shipper survey: Rail service is perceived as at least getting a little better; percentage of shippers planning to shift biz to NS from CSX declines slightly. Dennis Gartman writes, "Leveraging into a losing position is a mug's game;" shoe also fits for carloads where the RPU is less than the RVC ratio. Rule of 100 track maintenance expense updated to $7,800 per mile per year from $5,000.
Week ending July 14
Buffett on capital deployment; how Berkshire Hathaway morphed into an investment house from a textile factory. Ron Batory tapped for FRA Administrator; assuming the Senate confirms the appointment, the FRA will finally have an Administrator who knows a lot about railroads. Reading & Northern announces another banner season for its Fall Foliage outings. OmniTRAX-owned Sand Springs Railway wins BNSF's coveted "Premier Transload Facility" designation. Why the Class I railroad scene continues to be somewhat of an enigma; how to fit ops to the customer mantra that is a continuous "cheaper, better, quicker" drumbeat.
Week ending July 7
AAR revenue units up 6% year-over-year in the 2017 second quarter; merchandise carloads have shrunk to a third of the total. Rome wasn't built in a day Department: AAR Performance reports show CSX making marked strides in taking out yard dwell time and running the core trains faster between their terminals. Depressed used car prices and their impact on new car sales; why used car values are the foundation of the entire automotive industry.