Blanchard Railroad Week in Review, Fourth Quarter 2003

The Railroad Week in Review:
Fourth Quarter 2003

Current Issues

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Week ending December 19, 2003
We profile Progressive Railroad as an example of a shortline that is aggressively building and expanding its business base and service offerings. NS takes $50 mm write-down of telecom sub and announces $817 mm capital program for 2004. STB institutes proceeding for 2003 railroad cost of capital. A closer look at AAR performance measures. CP running mid-train RC units in intermodal service, adds to and standardizes intermodal car fleet. Rail stocks again hit 52-week highs.
Week ending December 12, 2003
Dow breaks 10000 and stays there; some strong indicators for railraods in general and shortlines in particular. CSX shortline meeting scores a number of firsts, future bodes well for shortline relationships. Getting the operating-pricing relationship right. GWR, RRA post November carloads; implications for the rest of shortlinedom.
Week ending December 5, 2003
Christmas came early with good economic news. RailAmerica adds Central Michigan. Trains magazine "map-of-the-month" features BNSF's hub-and-spoke network, a useful tool for shortlines and carload shippers. NS makes senior management changes. HDR Engineering's newsletter draws favorable reviews. Shortline event reporting scorecards are out and there's work to be done.
Week ending November 28, 2003
Thanksgiving Week, no WIR. Sorry.
Week ending November 21, 2003
BNSF's Financial Analysts conference bodes well for carload shippers and shortlines. Table with 23 separate performance improvement metrics. Trucker's new Hours of Service regs decried by shippers and trucking companies for raising costs and decreasing productivity. CSX selling off a few lines and opening others to trackage rights for shortlines. Ed Dodge to leave CP in Mar; Gary Spiegel leaves RRA this month.
Week ending November 14, 2003
Three from CSX: Mike Giftos will take his retirement next March. About 1,000 non-agreement personnel will be let go. CFO Oscar Munoz on data automation and network rationalization. Norfolk Southern's non-agreement buyout program was accepted by about 500 out of the 4,000 that were eligible. STB upholds as reasonable NS' common carrier rates on certain coal shipments to several of Duke Energy's facilities. Dave Parkinson buys San Pedro Southwestern, a former RRA property off the ex-SP at Benson, Arizona.
Week ending November 7, 2003
Seven leading trucking firms averaged an 8.8% yoy revenue jump in 3Q03, better than twice the rate of the best Class I railroad. We offer a modest proposal. More on the "Revenue per Intermodal Carload Equivalent" metric. How KCS preserved its operating revenue gains on the top line through operating expenses to operating income on the bottom line. GWR's excellent and refreshing account at the BB&T Logistics Conference webcast.
Week ending October 31, 2003
NS operating income even with 3Q02 with no change in either revenue or expense. KCS net got killed on the Mexican Standoff over TFM, but its domestic numbers show some real strengths. CP's actual performance was a lot better than the reported results, distorted by foreign exchange rates. RRA to exit Australia. Domestic same-store numbers lag what one would expect. GWR same store revenues up 7% yoy. BNSF shortline meeting concludes with a number of positive messages for attendees.
Week ending October 24, 2003
CN to buy the assets of the Great Lakes Transportation Group including the B&LE and DM&IR. 3Q03 operating income C$454 mm, down 6% yoy more on exchange rates than constant dollars. BNSF operating income up 2.6% on 3.6% more revenues and 4% added expense with fuel the chief culprit. FEC posted its eighth consecutive quarterly gain in freight revenues. UP posts 4% yoy quarterly revenue gain to $3 bn thanks to merchandise carload gains. Five of eight CSX merchandise carload categories posted RPU increases with revenue gains across the board.
Week ending October 17, 2003
Rail stocks continue to lag the DJIA in a persistent sideways pattern; what's behind this funk. Sep carloads for RRA were up only 1% while GWR got a 4% boost, 8% if you include the Oregon line annexed to its Portland &Western last December. Bill Burt of LAL addresses the Lexington Group gathering. remarks are excerpted here. Three solid uninterrupted hours with ASLRRA President Rich Timmons drew further insights on the shortline-Class I relationship. Conference call with STB Chairman Roger Nober and Senate Commerce Committee staffer Debbie Hersman.
Week ending October 10, 2003
Intermodal revenue per carload equivalent as a measure of relative yield with respect to car load freight. Table compares Class I results. Excerpts of Bear Stearns' Rail Outlook for 3Q03; CSX, NS, BNSF mentioned. Paper stocks back in favor - implications for RRA, GWR and other shortline operators.
Week ending October 3, 2003
UP investor conference good news for carload shippers and shortlines. WABCO wins contract for hand-held car repair reporting system at BC Rail. NS to sponsor TRANSCAER train tour down south in Oct. Phila Inquirer on changing transportation buying patterns. Third quarter estimates for the Big Six.

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