Blanchard Railroad Week in Review, Third Quarter 2015

The Railroad Week in Review:
Third Quarter 2015

Current Issues. Available in Adobe Acrobat format only. You will need the free Adobe Acrobat reader.

Week ending September 25
The Fed punts and other economic cheerfulness; impacts on railroad revenue unit volumes. Mark Manion to decamp from NS; Wick Moorman passes Chairman baton to Jim Squires. RailTrends lineup first glimpse.

Week ending September 18
What may happen if Congress fails to pass a law extending the December PTC deadline; short lines will be toast. AAR carloads slip again YTD; no real change over five years. A way out. BNSF capacity additions on northern tier help short lines, too.

Week ending September 11
Munoz departs CSX to pilot United/Continental thru turbulence; Gooden tapped as President. Genesee & Wyoming August North American carloads drop11 percent year-over-year. Table. Central Maine & Quebec Railway wins Maine DOT contract to run the 58-mile Rockland Branch; Giles Open Letter to Lac Megantic. BNSF elaborates on what's behind AAR performance metrics. For all the reports of gloom and doom out there, I'm still seeing signs of life in the carload biz. Recent train rides on the ex-Reading in Philadelphia's northern suburbs and along the former Erie in southeast NY took me past shortline interchanges that were quite busy. I know the operators and they are particularly adept at looking under every rock for new revenue opportunities. And they just signed on new equity partners, too.

Week ending September 4
How two short lines, a regional economic development organization and a power plant are reinventing the railroad in Pennsylvania. Dwell and trainspeed deteriorate; are carload shippers at risk? Graph. What exactly is GDP and why should you care?

Week ending August 28
Union Pacific held its 23d Annual Shortline Conference in Omaha this week; if any railroad ought to be shortline friendly, UP is at the top of the heap. The US Department of Agriculture sees the grain outlook improving in the US but not so much in Canada. Providence & Worcester reports second quarter freight sales came to $9.3 million, unchanged, on 15,255 revenue units, down three-tenths of a point. The close ties between US oil prices and rail traffic volumes continues; Morgan Stanley's Adam Longson comments.

Week ending August 21
Railroad and railroad supplier shares are all in "bear market territory," i.e, sporting declines of 20 percent or more off their highs. Tony Hatch bucket list of RR mgt concerns; Drew Robertson's dwell chart shows graphically one in particular. How the ASLRRA aims to showcase shortline initiatives to stem the decline in carload commodity moves.

Week ending August 14
BNSF second quarter total revenue comes in at $5.4 billion, down seven percent, posts the best six-month ops income gain and the second-lowest OR with the best year-over-year improvement. Genesee & Wyoming July carloads for railroads in the US and Canada decline 11.4 percent, including new acquisitions; same-store names off 13.2 percent, or just under 21,000 units. The Chinese currency devaluation takes its toll on commodities and on railroads working those commodities. Gary Shilling: "China now consuming more than 40 percent of annual global output of copper, tin, lead, zinc and other nonferrous metal."

Week ending August 7
Genesee & Wyoming North American freight revenue declines five percent in the 2015 second quarter. Musings on boxcar turns and how to make reinvestment pay for itself. A shortliners' business-development advice to his Class I partners.

Week ending July 31
Norfolk Southern brings up the markers for the Class I Earnings Season; hardly their finest houtr. Yet if you drill down beyond the loss of coal revenue and the drastic drop in fuel surcharges, it was "less worse" — to use Jim Squires' phrase — than it looks. I think Manion is getting his arms around the service issues and Shaw talks of definite signs of life in the merch carload sector. Velocity in car-miles per day is critical and short lines can help.

Week ending July 24
Earnings abound. CN leads the six rails reporting to date with year-over-year gains in revenue, merchandise carload revenues, and more. Canadian Pacific freight revenue decreases two percent to C $1.6 billion on three percent fewer revenue units; corporate intrigue. Union Pacific total revenue declines ten percent to $5.4 billion on vols down six percent and system RPU down five percent.

Week ending July 17
CSX opens the Q2 earnings season with record quarterly operating income, operating ratio and earnings per share. GWR's June carloads in North American disappointed, but that was to be expected. KCS clocks in with revenues down ten percent to $1 billion on six percent fewer revenue units (537,200); RPU shrank four percent.

Week ending July 10
Why I see good news out there, even if rail vols and share prices are in a sideways rut. Iowa Pacific's Ed Ellis on what's wrong with the present RR model and how to fix it. Meds for Grandma vs. fixing pot holes on the Interstates. How government can support short lines in Canada.

Week ending July 3
Railroad industry share prices are in a deep funk; no end in sight for a year or so. Why merch carload trends are particularly worrisome. Rethinking the carload model.

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