Blanchard Railroad Week in Review, Fourth Quarter 2015

The Railroad Week in Review:
Fourth Quarter 2015

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

Week ending December 24
WIR closes out the year with recent developments in the CP-NS debate; how the NS feeder railroad network can add to the top line and take a bite out of the ops expense line. Week 49 carloads: everybody's down but BNSF; some thoughts as to why. Wabtec remains aloof from carmakers' travails.

Week ending December 18
Bare knuckles rule as CP's Hunter Harrison and Pershing's Bill Ackman seek to convince NS shareholders that the CP proposal offers the better long-term value; I have my doubts. The 45G shortline tax credit is once again down to the wire. Tank cars looking for places to wait between crude-oil loads; got spots? Rail Equipment Finance at La Quinta Mar 6-9 for 30th year.

Week ending December 11
The gloves come off as CP addresses Norfolk Southern's response to its latest offer; short lines get paper barrier relief under CP plan. CSX to change its listing to the NASDAQ from the NYSE effective after the market close December 21. Genesee & Wyoming November carloads for North America drift south by 13 percent from what they were a year ago.

Week ending December 4
NS rejects CP overtures; comparing the two franchises. Table. Two short lines take on more NS first-mile, last-mile tasks. The CSX Railroad Education and Development Institute (REDI) is open to short lines. More on the CP/NS argument next week.

[No issue November 27--Thanksgiving]

Week ending November 20
Canadian Pacific releases the full text of the letter sent to NS regarding the CP business combination proposal; feeder line implications. A fuel surcharge observation and proposal. RailTrends attendance another record; take-aways for non-Class I rails.

Week ending November 13
BNSF third quarter sales slipped five percent to $5.3 billion on 2.4 million revenue units, up two percent; average RPU was off seven percent. Genesee & Wyoming October total North American carloads down 13 percent; same-store vols off 15 percent. A shortline survival strategy. CP and NS: Too many moving parts, not enough real data to comment. Stay tuned.

Week ending November 6
Canadian National leads off the second week of Q3 earnings reports with a jaw-dropping 53.8 operating ratio; Best of Class in many key metrics. Norfolk Southern third quarter revenue drops ten percent to $2.7 billion as carloads and containers decline three percent. Genesee & Wyoming third quarter operating revenues increase 26 percent to $546 million; operations in North America Q3 freight revenue $214 million, off ten percent.

Week ending October 30
Union Pacific total third quarter revenue decreases about ten percent to $5.6 billion; revenue units slip six percent. Ops expense drops 13 percent as UP adjusts resources to service demand. Operating income down 5%; OR 60.3, a record quarterly low. BNSF Shortline Conference a bit hit. Commodity breakout sessions, senior management briefings and individual meetings provide myriad take-aways; getting creative with its shortline initiatives.

Week ending October 23
The Northeast Association of Rail Shippers (NEARS) holds its annual fall conference in Philadelphia, attracting nearly 300 souls representing railroads, shippers, and suppliers. KCS reports disappointing Q3 results; why KCS could lose share among the auto makers in Mexico. CP shows how to turn a sow's ear of traffic volumes into a silk purse of operating results.

Week ending October 16
CSX third quarter revenue units were off three percent year-over-year; hints on how the coal network may be cut down size. GWR Sep carloads down 5%, Of the commodities that comprise 80% of GWR-NA vols, only three are in the black; of the remaining 20%, only two are positive.

Week ending October 9
The third quarter earnings season is shaping up as one of contraction for railroad volumes; commodity specifics, shortline hits. Capex and RailTrends 2015. A letter from Linda Bauer Darr, ASLRRA President.

Week ending October 2
Congressional kabuki and the budget; how their shenanigans affect markets (clue: not much). Third quarter earnings around the corner with so-so vols and perhaps some earnings gains. GE Rail Services sells assets to Berkshire Hathaway interests. Deb Butler retires from NS, gets Memphis class yard renamed in her honor. Short lines increase vols as Class Is focus on returns per carload. House Committee introduces PTC extension bill.

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