Blanchard Railroad Week in Review, Third Quarter 2023

The Railroad Week in Review:
Third Quarter 2023

Week ending September 29
"Precision agriculture" and railroad ag-related carload volumes; 3 exhibits. RailTrends 2023 preview.

Week ending September 22
Reader response to my review of the STB decision on reciprocal switching last week has been most informative; particular emphasis on paper barriers and "captive shipper." Railroad freight volumes remain in the doldrums; why you need to know what's coming as opposed to what's been.

Week ending September 15
FRA conducts surprise inspection of UP and finds an unusual number of reportable defects; Jim Vena is not amused. STB proposes new rules on reciprocal switching; impact on non Class I carriers not clear.

Week ending September 8
Third quarter revenue unit volumes are nothing to write home about; intermodal boxes continue to take the biggest hit. CSX President and CEO Joe Hinrichs at TD Cowen’s 16th Annual Global Transportation Conference; Cowen host Jason Seidl leads Hinrichs through a series of thoughtful questions. Parting shot: How I view the RR world and for whom I write WIR.

Week ending September 1
Norfolk Southern suffered an early morning service outage Monday that severely disrupted train operations; quickly resolved and no real harm done. Traffic levels remain depressed; share prices following suit? Berkshire & Eastern begins operations on former Pan Am Southern; possible shortline implications to the good.

Week ending August 25
Using technical stock analysis as a way to gauge future Class I railroad performance; NS example. The promise and threat of artificial intelligence (AI) in the railroad environment. Running to plan and providing accurate car movement data requires discipline and goals; how CN uses data to measure operating performance.

Week ending August 18
Class I railroad performance reports to the STB; easy to read charts from Union Pacific and BNSF – why can't the others follow suit? Class I data collection regarding car location seems to be in total disarray; Apple solution is at hand – why don't they use it? Book review: Seldom Willing by Fred Frailey — a novel for railroaders written by somebody who understands the business and speaks railroad; hardcover at Amazon for $25.

Week ending August 11
BNSF railroad year-to-date through the end of Q2 the handled 4.3 million revenue units vs 4.9 million a year ago, down 11%; Intermodal was the big downer, off 18%. Boychuk leaves CSX; unanswered questions.

Week ending August 4
WIR this week is sort of a summary of my unofficial observations drawn from the quarterly conferences and their materials. There seemed to be a greater customer focus, but Ito me it was short of specifics for the quarter and where they intend tend to go from here. For an example of what I'm talking about, listen to Tim Cooke's comments on the Apple earnings call yesterday afternoon. The shortline quotes are from emails, texts and phone conversations over the past couple of weeks. There is a lot of energy out there but unfortunately in the present Class I configuration there isn't any place for it to go.

Week ending July 28
I didn’t have to dig too deeply into the details to come away with a sense of a renewed customer commitment. My question is whether the lower ranks will walk the talk of the brass. I’ll touch on that Friday. Union Pacific handled 2 million revenue units, down 2%, for $11.2 billion in freight revenue, down 1%; comments on the current quarter merchandise, carloads, and outlook. Canadian National revs down 7% on lower volumes across-the-board; updated four year outlook. CPKC brings in some outstanding numbers but the comps are misleading because KCS results were not included for half the period; the operating department delivered its usual solid performance. Norfolk Southern revenues and carloads were both down year over year, however, the merchandise group appears to be taking a larger and larger part in the traffic base. Follow through is going to be key.

Week ending July 21
CSX leads off the Q2 earnings call season with very modest results in carloads and revenues; the overall tone and message is positive and the leadership is in place to maintain the momentum. Why there still may be some life left in the frac sand business. CSX call brings out some positive trends for home builders and lumber demand.

Week ending July 14
One sees a steady stream of charts depicting carload traffic trends, industry growth/expansion, truck rates, and so on; the trick is to sort the wheat from the chaff. BNSF Key Performance Indicators chart sent to STB; why it’s so very helpful. Analysis and conclusions from he AAR Metallic Ores and Metals category in the July Rail Time indicators.

Week ending July 7
Second quarter results showing up; UP starts with merch carloads off a mere point. Passenger trains as a marketing tool — how can you sell product if the customer can’t see how it works? In the PR mix, consider the public that our officials play to — they’re customers too, in a sense. Many communities, absent the local presence of passenger trains, see the railroads only as a source of delay at blocked crossings. What can we do to increase a positive presence? I’d like to open a conversation.

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