Blanchard Railroad Week in Review, Fourth Quarter 2017

The Railroad Week in Review:
Fourth Quarter 2017

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

[No Week in Review December 29]

Week ending December 22
Hunter Harrison died last Saturday afternoon; Board names Jim Foote Acting CEO. Railcar Report from PFL advises that crude by rail is moving again; how short lines storing cars can add value. RealVision's Greg Weldon on employment trends and how they relate to specific industries; some rail-friendly commodities are up in price and are in short supply. Genesee & Wyoming November North American carloads slip 4.6% year-over-year.

Week ending December 15
Hunter Harrison takes medical leave from CSX Chairmanship "due to unexpected complications from a recent illness" for an unspecified period of time; Board names Jim Foote, COO, as Acting CEO. A closer look at RailTrends 2017; a key theme is removing impediments to further growth. Short lines making the news by expanding the customer base.

Week ending December 8
A new growth strategy for railroads -- why railroads are losing share, emphasis on merch cartload franchise; excerpts from the transcript. Notes from my recent call on the Canadian Pacific in Calgary; short lines as market extenders.

[No Week in Review December 1]

Week ending November 24
The oil futures market may be flashing a warning; shale producers as the "shock absorbers" for the global oil market. A question for the readership: Is short line consolidation into a few holding companies good for the industry? Export coal for short lines. New CSX car storage rules create short line opportunity.

Week ending November 17
A recent UBS note, "Homebuilding — Implications for the For-Sale Market from the Single-Family Rental Market" has implications for railroad lumber customers; AAR says little change in carload vols year-over-year -- trend chart. Further reflections on GWR Investor Day. Don Phillips takes positive view of railroad commodity trends in Trains; I say trends could be better and why.

Week ending November 10
Central Maine & Quebec reports 3Q2017 total revenue of $8.3 million, up 12% year-over-year, on 6,254 revenue units, down 5.8%. BNSF 3Q revenue $5.3 billion, up 3% vs. a year ago; operating income gains 4% to $2.0 billion, operating ratio of 63.3. Comparing Class I railroad 3Q results; KCS scores six winners out of the nine comp categories I use. GWR holds Investor Day; slide set a very good primer on short line and regional operations.

Week ending November 3
For Q3... CN total sales up 7% to C$3.2 billion; operating income gains less than 4% to C$1.5 billion. NS revenue increases 6% to $2.7 billion; ops income gains to $911 million, OR 65.9. UP total revenue increases 5% to $5.4 billion; revenue units slip a point to 2.2 million, though manifest carload units increase 15%. GWR North American total revenues $319 million, up 3%; revenue units were up a point to 408,000, though same-store carloads were down 2%. RailTrends in NY (Nov 30- Dec 1) will feature a Canadian I Chief Commercial Officer face-off.

Week ending October 27
BNSF shortline meeting concise and to the point; common thread was a clear shortline focus. CSX Q3 freight revenues ($2.6 billion) and revenue units (1.6 million) up less than one percent each; operating ratio 68.1 vs. 69.0 a year ago. Canadian Pacific freight revenues $C1.6 billion, up 3%, on 664,000 revenue units, up 3%; merchandise carloads gain 7%. Kansas City Southern freight revenues up 9% to $634,000, revenue units up 3%; RPU up 6%.

[No Week in Review October 20]

Week ending October 13
One of the most rewarding things about doing Week in Review every week is its interactive nature; response to my recent screed about railroad managers understanding supply chains. Critical thinking on asset management from readers with considerable experience in Class I planning. Canadian Pacific and Genesee & Wyoming offer a new through service between Chicago and Jeffersonville, Ohio. PFL Storage Report advises that more cars are coming out of storage than going in, freeing up more storage slots daily; sample car types. FEC/GMTX correction.

Week ending October 6
Union Pacific redesigns its Marketing & Sales organization, consolidating the present six major business units into four: Agricultural Products, Energy, Industrial and Premium; who's in charge of what. Do railroad managers really understand customer supply chains and how they work; an example with numbers. OmniTRAX taps Pierre-Luc Mathieu as president of OmniTRAX Energy Solutions (OES), managing the whole company's offerings to the proppant supply chain. RailTrends 2017 brings a trade focus; presenters named.

THE BLANCHARD COMPANY
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Roy Blanchard, rblanchard@rblanchard.com
Laura Blanchard, lblanchard@rblanchard.com