Blanchard Railroad Week in Review, Second Quarter 2012

The Railroad Week in Review:
Second Quarter 2012

Current Issues
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Week in Review, June 29
Pan Am Railways and CSX introduce Maineline-Chicago, a new, expedited paper and pulp service out of Maine. Two success stories where last-mile short lines made significant infrastructure investments to meet customer supply-chain requirements. Why tracking operating expense by customer and GTM is no longer an optional exercise. Interchange Measurement spreadsheet updated and it's free.

Week in Review, June 22
Re-power your GP38-2s for increased horsepower, lower maintenance expense and lower emissions. North Shore Rail Group sold to management by founder. Bakken crude oil continues to move into and through New England to St John, NB. Utility burning Illinois Basin coal cuts back; railroad implications. Housing starts up, but not up that much. Why railroad economics are "compelling."

Week in Review, June 15
RailAmerica, Genesee & Wyoming May car-counts; ex-coal they didn't do badly. Why the "Transportation Village" concept works so well for Class II and III railroads. Week 23 (June 9) carloads for short lines, regionals and Class Is. Why I think railroad shares are under-priced.

Week in Review, June 8
The top four "job multiplier" industries are also among the top revenue-producing industries for North American railroad. Lycoming Valley Railroad adds another nat-gas related customer; grant money helps. CIT orders 3,500 new cars for crude oil and frack sand; Bakken crude run-through BNSF-CSX-PAR-NBSR. Wick Moorman rings NYSE closing bell on 30th anniversary of Norfolk Southern listing.

Week in Review, June 1
The Wolfe Trahan Fifth Annual Transportation Conference in NY was yet another winner. More ASI-Transmatch traffic charts that make the commodity carload deltas really jump out. Why ADM gets an Underperform from Credit Agricole; implications for granger short lines. I bought CN in May and will go away.

Week in Review, May 25
Shortline, Class I YTD carload comps. Coal still down lots but other energy-related commodities -- crude oil, frack sand, cement, pipe, etc. -- picking up the slack. Share prices for companies that make, mine and grow stuff generally down, indicating less-than-robust YOY sales. This can't help RR vols. ASI Transmatch says institutional investors trimming transport holdings. Caveats from Berkshire 10-k. Two northeastern lines that have been o/s for years may see trains again. Fortress acknowledges it "is considering" the sale of RailAmerica.

Week in Review, May 18
Pershing Square wins CP proxy battle, Steve Tobias interim CEO. RailAmerica in Play? Sources say offering letter has gone out from major NY bank. Marino sells Patriot Rail for $200 mm plus. Providence & Worcester trims first-quarter year-over-year operating loss to $1.5 mm from $1.8 mm. Notes from the 21st Annual Pennsylvania Rail Freight Seminar.

Week in Review, May 11
GWR and RA April carloads flat to down; coal is the elephant in the living room. Absent coal, carloads are looking up. Thoughts on this week's successful NEARS session in Providence, "Shippers: A Different Perspective." It was truly that.

Week in Review, May 4
GWR rounds out the first quarter earnings season with increased sales, operating income and earnings per share (this last adjusted for one-time items). North America results fare particularly well -- even considering a double-whammy from coal. GWR tucks a 26-mile NS branch into its SW Georgia contiguous cluster. Map. Seekingalpha.com on truck vs rail economics. Is lumber coming back? Using housing starts and local traffic trends to find out.

Week in Review, April 27
Rounding out the Class I earnings season with modest gains in carload traffic and a so-so outlook for the balance of the year. The financials are getting stronger as a result of increased ops discipline and sharper pricing. Short lines that can zero in on the best-yielding commodity lanes and match service improvements will be well-served.

Week in Review, April 20
CSX, Union Pacific and Canadian Pacific had their days before the analysts this week to report first quarter results. In order, at least by my way of thinking, good, better, best. I think The Street is still making too much fuss over coal and not giving props for the manifest franchises, which is where most of the money comes from. CP really knocked the cover off the ball with ten points of the OR, carload vols ex-coal up 8% and dwell down to 17 hours. Grant money flows to Saskatchewan short lines.

[no April 13 Week in Review - Arizona trip]

Week in Review, April 6
First quarter carloads for both Class I and non-Class I railroads up or down, depending on what you include. Outlook isn't much better for the next 8-12 months. More coal story color: why the US and Canadian Class Is differ in coal role; why eastern Class Is get hit harder; some observations re shortline exposure to coal ups and downs. KC Southern gets good marks from Credit-Suisse. Why short lines need to send their car hire experts to the ASLRRA all-day session April 22 in Indy. Stifel Q1 review and two-year outlook. What will your short line look like in 2016? Some considerations for what it ought to look like.

THE BLANCHARD COMPANY
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Roy Blanchard.215-913-7740 mobile, royblan@icloud.com
Laura Blanchard, 215-985-1445, lblanchard@rblanchard.com