Blanchard Railroad Week in Review, Second Quarter 2023

The Railroad Week in Review:
Second Quarter 2023

Week ending June 30
Total YTD revenue units thru June 24 dropped four percent to 16.2 million because intermodal was off ten percent; merch carload increases not exciting. Consumer spending trends and rail vols. CPKC, KCS, G&W team up to end NS domination of the KCS Meridian-Dallas line.

Week ending June 23
Checking out ChatGPT from a railroad angle. Where’s it being used and how? Where might it be used to good effect? Huge caveats.

Week ending June 16
Why the fed’s high interest levels are hurting commercial credit availability and by extension could affect railroad freight customers. Second quarter 2023 freight volumes set to be on the cusp of improvement. State-owned SC short line gets grant to build 25 miles of new railroad to access Volvo plant.

Week ending June 9
Constructive UP update from Lance Fritz; TPC improving. St Louis Fed chart shows slowing commercial loan activity; implications for freight railroads.

Week ending June 2
STB not satisfied with Class I performance reporting, CSX alone gets thumbs-up; BNSF a particular concern. Norfolk Southern shortline meeting observations. Fudging car placement for the STB.

Week ending May 26
AAR North American carloads and intermodal boxes moving in Week 20 (ending May 20) decline another eight percent, taking the full-year score to a minus six percent; the UP-BNSF revenue unit spreads get worse as you drill down into the commodity sectors. NS shares upward share price trend reverses suddenly. Correcting and updating my ag products export observations from last week.

Week ending May 19
The US Department of Agriculture expects total corn, wheat, and soybean production to increase by nine percent after a seven percent decline vs. a year ago; where it goes and what railroads can be involved. Railway Age Ed in Chief Bill Vantuono rides the CSX office cars with Joe Hinrichs and other railroad notables; link to his story. Getting back to the core business.

Week ending May 12
BNSF reported 1Q2023 results Saturday. Revenue units decreased 10% YOY to 2.1 mm units, freight revenue increased 2% to $5.8 bn. Was Soroban move at UP to oust Fritz ill-timed?

Week ending May 5
BNSF reports 1Q2023 results as part of the Berkshire event tomorrow; what to expect based on quarterly AAR carload report and other incidental intelligence. STB extends the EP 770 temporary reporting period for all Class I carriers to December 31, 2023; modifies reporting requirements for CSX. What ISM New Orders Index portends for transportation demand.

Week ending April 28
CN 1Q2023 revenue units increased less than 1% year-over-year at 1.3 million. Manifest carloads plus automotive represent 53% of the total and increased 11% vs. a year ago. NS total Q1 freight revenue was $3.1 billion, up seven percent, on 1.7 million revenue units, unchanged; system RPU gained eight percent. CP handled 679,500 revenue units, up 9%t, generating freight revenues C$2.2 billion, up 23 percent; RPU increased 14 percent to C$3,263.

Week ending April 21
CPKC now an operating company; PSR done right. Powerful CSX Q1 presentation; creating customers with a quality product. Union Pacific disappoints in Q1. Can AI and robotics in train make-up and operation prevent another East Palestine?

Week ending April 14
FRA Safety Advisory analysis of the recent train accidents; FRA recommends "best practices" to improve train safety and reduce the risk of accidents. Forward earnings estimates inconsistent with AAR volume trends; can forfeiting a few OR points add sticky customers?

Week ending April 7
Why lumber loadings are a good indicator of railroad customer activity. Most STCC 24 lumber etc.is used for building construction, ergo the positive correlation between rail carloads of lumber and wood products and U.S. housing starts. Housing start trending down to lows not seen in years. The affordability question.

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