Blanchard Railroad Week in Review, First Quarter 2023

The Railroad Week in Review:
First Quarter 2023

Week ending March 31
Through Week 11 (March 18), railroad revenue units badly lagging year-to-date; why it’s different this time. CSX carbon calculator as a marketing tool. Rail service sucks: Weekly revenue units essentially unchanged from October, 2020, metrics deteriorating. Manufacturing ISM and railroad outlook.

Week ending March 24
Watco’s Stefan Loeb, EVP and Chief Commercial Officer, has been tapped by NS to fill a new senior position, VP First and Final Mile Markets. Continuing our thread of fertilizers on the railroad; who makes what, how it’s used, and how the railroads fit. NS and UP shares now have entered short-sale territory; Dow Jones Railroads index hits lows not seen since last fall.

Week ending March 17
CPKC approved by STB; press release says it all: protect competition, not competitors. NS safety blitz on bearing failure detection, not prevention. First of a series on where the carload business is; a primer on fertilizers.

Week ending March 10
NS string of derailments in Ohio — is there any common root cause? Class I share prices still trending down — what's the Street trying to tell us?

Week ending March 3
BNSF full year total revenue up 12% to $24.5 bn on 6% revenue unit decrease to 9.5 mm units; merchandise carloads including industrial and agricultural products down 4%. Soroban Capital sends UP Board letter expressing its displeasure with the railroad’s performance under Lance Fritz; I’m afraid the Soroban overture smacks of what Tony Hatch accurately tags as “the Cult of the Operating Ratio.” Caterpillar is taking a $925 million non-cash goodwill impairment charge related to their Progress Rail division; only Wabtec remains as supplier of mainline Week fight locomotives.

Week ending February 24
NS Ohio derailment background and first-findings; roller bearing failure on leased tank car of hazmat. NS share prices dip into short territory; potential regulatory fallout.

Week ending February 17
Continuing the dwell and velocity thread; the CN example. NS derails in eastern Ohio; possible mechanical failure, NTSB on the case. Comparing 2022 total Class I debt, equity, and share buybacks; in most cases the amount spent on share repos was greater than free cash flow.

Week ending February 10
How to interpret velocity and dwell numbers; why I think everybody measures them differently. Recession or not, the forward numbers are not encouraging; time to start shaping your services to match your customers' diminished needs.

Week ending February 3
Canadian Pacific Pacific closes out the 4Q2022 earnings call season with solid results and an encouraging 2023 outlook. Detailed revenue unit analysis. No real guidance on CP-KCS merger.

Week ending January 27
Four Class Is reported Q4 and FY results this week; the common thread running through the calls was one of customer collaboration. Union Pacific Q4 revenue units increased one percent to 1.9 million; total revenue was $6.2 billion, up eight percent. CN Q4 revenue hit $4.5 billion, up 21 percent, on 1.4 million revenue units, up three percent. NS took in Q4 revenue of $3.2 billion, up 13 percent, on 1.7 million revenue units, down a point; RPU jumped 18 percent. CSX total Q4 revenue came to $3.3 billion, up nine percent, on 2.1 million revenue units, down two percent.

Week ending January 20
Tony Hatch and FRA Administrator Amit Bose on railroad technology and automated trucks. Observations on the railroad carload opportunities for construction materials. Continuing my commentary about railroad performance and stock charts; UP in the cross-hairs.

Week ending January 13
Using technical stock chart analysis to gauge Class I railroad performance and outlook; NS example. Reading & Northern anthracite niche pays off two ways.

Week ending January 6
STB issues Emergency Service Order for Foster Farms; Board Member Schultz dissents. FRA prepared to fund $600 million for “railroad crossing elimination.”

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