Blanchard Railroad Week in Review, Second Quarter 2022

The Railroad Week in Review:
Second Quarter 2022

Week ending June 24
Foster Poultry Farms, a UP-served California chicken grower and processor, petitioned the STB for an Emergency Service Order concerning UP service failures dating back to February; financialization at fault? Intermodal huge drag on YOY revenue unit rate of change. IYT chart.

Week ending June 17
Why the STB is not pleased with the Class Is’ first round of responses to the Board’s May 6 directive concerning service recovery plans. Headline AAR carloads continue to drift south; dig deeper and find encouraging words in the manifest commodities starting with industrial chemicals. Keith Creel on what it takes to make PSR work the way it should.

Week ending June 10
At April’s STB hearings on railroad service, shippers remarked on the superior FMLM service they see at shortline-served locations; solution: more Class I light density line transfers to local operators — one example. Stupid things done to save money in the name of PSR; over-managing car hire, e.g. UP gets good marks for RailPulse collaboration.

Week ending June 3
Long-time associate comments on sorry status of railroad industry; asks who’s responsible? Stock market share trends for major railroad commodity customers as leading indicator of railroad carload levels; further observations re fertilizer futures. FRA dolse out $329 million in CRISI grants; who gets how much for what.June 23 Rail Insights conference preview.

Week ending May 27
The first of the weekly Class I service recovery reports required by the STB are in; summary and highlights. Norfolk Southern QTD commodity carloads as reported at Wolfe conference; not impressive.

Week ending May 20
Implications of the Ukraine situation for the steel market; why ferrous scrap and anthracite coal are critical. Union Pacific second quarter to date showing improvement in operations, merchandise carload volumes.

Week ending May 13
STB requiring US Class Is to file weekly “service recovery plans” including customer-centric performance metrics. Increasing signs of “demand destruction” and how it will affect railroads.

Week ending May 6
STB requiring US Class Is to file weekly “service recovery plans” including customer-centric performance metrics. Increasing signs of “demand destruction” and how it will affect railroads.

Week ending April 29
CN 1Q2022 total revenue up five percent to C$3.7 billion on a six percent decrease in revenue units to 1.3 million; merchandise carloads decreased seven percent to 639,000 with particular weakness in grains/ferts, down 18 percent. NS first quarter revenue units were off five percent, though freight revenue increased 11 percent thanks to the 16 percent RPU increase. CP quarterly revenue units down ten percent; total revenue fell six percent to C$1.8 billion. First impressions from STB hearings on railroad service; more detail next WIR.

Week ending April 22
Two Ukraine-driven trends that could very well impact US freight railroads; fertilizer makers take big hit. STB approves the CSX application to acquire Pan Am Railways and its subsidiaries; decision gives a flavor as to what the Board deems important and how it may rule in the future. CSX posts Q1 earnings up on decreased carload volumes. UP Q1 revs up alot, vols up a little; outlook chart.

Week ending April 15
Notes from NEARS in Baltimore last week; Keith Creel commentary most enlightening. Baltimore steel products shipper tells why he no longer uses the railroads to serve his customers. Truck utilization vs. train speed. How the prices of corn and diesel fuel relate. The STB Thursday afternoon approved the CSX filing to acquire Pan Am Railways. You can download the 75-page decision on the STB website. [Link: https://www.stb.gov/news-communications/latest-news/pr-22-22/ ]

Week ending April 8
With only one more reporting week to go in the quarter, total revenue units were down 4.0 percent year-over-year; merchandise carloads including automotive eked out a ten basis point gain. Coal is at least getting a reprieve for now; possible Ukraine effect. How the shift in nat gas supplies will affect farmers directly and food chains indirectly. As wages go up, relative cost of Capex goes down.

Week ending April 1
Service metrics and asset management; Hunter Harrison and Tom Peters quotes. Creating shortline to shortline moves with the Class I as overhead carrier. What’s ahead for nat gas and related commodity prices; shifts in RR commodity trends. NS new share buyback program. Trains Editor Jim Wrinn, 61, succumbs to cancer.

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