Blanchard Railroad Week in Review, Third Quarter 2019

The Railroad Week in Review:
Third Quarter 2019

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

Week ending September 13
Cowen Conference highlights. UP strong commodity carload performance; group comprises 69 percent of UP revenues. NS champions pricing over volume. KCS the most customer-focused. RailTrends 2019 preview.

Week ending September 6
OmniTRAX to buy Cleveland Commercial Railroad (CCRL) and its wholly owned subsidiary, Cleveland Harbor Belt Railroad (CHB) for an undisclosed price. Canadian National and CSX have inked an agreement for the former to acquire the Massena rail line from the latter; short line implications? CSX names Adam Longson VP Energy, effective Sept. 9. Canadian Pacific to hold 2019 Shortline Workshop at the CP campus in Calgary October 27, 28.

[No Week in Review August 30]

Week ending August 23
OmniTRAX discontinuing service on its Central Texas & Colorado River Railway; anticipated traffic increases that had motivated the purchase of the line never materialized. Canadian National publishes its 2019-2020 Grain Plan and invites feedback from interested parties including short lines. Comparing UP traffic projections made on Q2 earnings call with YTD results half way through Q3; commodity pattern mirrors what’s happening on all the US Class Is.

Week ending August 16
One continual theme in the railroad business over the last six months has been the steady decline in revenue units; two charts. GWR 2Q YTD results; bulk commodities see largest gains. Now that all the results are in, it’s time to tally how the Class Is scored in percentage changes in my key financial and operating measures; CP ranks first seven of the nine categories. CP to hold 2019 shortline meeting in Calgary October 27-28; reception Sunday evening and formal remarks Monday morning with breakout sessions in the afternoon.

Week ending August 9
BNSF Q2 revenue $5.9 billion on 2.3 million revenue units, for an RPU of $2,299, up four percent. Of 17 commodity groups reporting, only four saw YOY gains; industrial products volume changes were primarily due to strength in the energy sectoroffset by lower sand volumes and reduced car loadings due to the challenging weather conditions in 2019. Why the Class Is are behaving as they do with respect to the manifest carload business; how short lines can cash in. How Watco’s Crew Connect software simplifies crew management and hours of service tracking.

Week in Review August 2
Why I think Class Is are spending more on share buy-backs than capex. OmniTRAX buys Winchester & Western for $105 mm. Santa Maria Valley Railroad celebrates 108th birthday. Pioneer Railcorp acquired by Denver investor group; $$$ not revealed. Anonymous deal-maker seeks $10 mm to buy three mystery short lines.

Week ending July 26
Earnings Week closes with three reports. Canadian National reports record quarterly revenues of C$4.0 billion, up nine percent, on 1.5 million revenue units, up two percent; 11 percent operating income gain to $C1.7 billion. KCS freight revenues increase four percent to $678 million; total revenue increases five percent to $714 million. NS reports total revenue $2.9 billion, up 90 basis points, on 1.9 million revenue units, down 3.8 percent; OR 63.6, off a point year-over-year. It’s getting to the point where the railroads are spending more on share repos than they are capex.

Week ending July 19
Canadian Pacific second quarter revenue units increase six percent to 716,800 and freight revenue gains 13 percent to C$1.9 billion, thanks in part to the seven percent RPU gain. CSX total revenue units decrease four percent in the second quarter; merchandise carloads, including auto, increase one percent; coal gains two points and intermodal plummets 11 percent. Union Pacific revenue units off four percent to 2.1 million units in the second quarter; commodity revenue slips two percent to $5.2 billion but total revenue, $5.6 billion, was down just a point.

Week ending July 12
Short lines, switch carriers, and regional railroads are closing ranks by getting closer and closer together; will we see more Alphabet Routes? First half 2019 weekly carload trends revisited; second-half comps repeating 2016-2018? Further thoughts on GWR going private.

[No Week in Review July 5]

THE BLANCHARD COMPANY
2041 Christian Street - Philadelphia PA 19146-1338 (215) 985-1110 voice - (215) 985-1446 fax
Roy Blanchard, rblanchard@rblanchard.com
Laura Blanchard, lblanchard@rblanchard.com