Railroad Week in Review:
Third Quarter 2002
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ending September 27, 2002
Canadian Transportation Agency (CTA) denies the running rights applicationof
Ferroequus Railway Company. Truckers looking at a fairly robust Q3 in
terms of yoy earnings increases. Union Pacific and NS set prices for
UP origins with NS destinations for sheet steel, coil, and all other
finished steel products (not including scrap); NS-to-UP pricing to come
later. CN wants out from under its 42% stake in EWS. Kansas City Southern
warns 3Q earnings will fall short; analysts cut estimates 25%. Genesee
& Wyoming starts NYSE trading 9/27 with ticker symbol GWR. Standard
& Poors reaffirms "triple-B-plus" (adequate capacity to
meet obligations with some constraints) and "A-2" (satisfactory
capacity subject to the same constraints) ratings to various levels
of BNSF debt.
ending September 20, 2002
This week a note from Ed Burkhardt's Rail World lays out bid process
in BAR bankruptcy court. RailAmerica Treasurer Michael Howe makes the
case for FCF based on operating income. New AAR intermodal study says
the mode will keep growing at a 5% per year clip. Why I think that's
good for carload shippers as well. Amtrak to drop express service and
rebuild Beechgrove wrecks. Railinc releases "Concur" web-based
car management system for shortlines. Conrail YTD stats thru July. Do
rail stock prices mirror franchise management? UP completes Utah sale.
ending September 13, 2002
Rail stocks bracket the unchanged DJIA with NS, CN up 4%. J P Morgan
Logistics Conference railroad presenters generally upbeat. More comment
on the recent CSX earnings warning. BNSF ramps up 18 new intermodal
lanes with money-back performance guarantees. Days may be numbered for
West Virginia lawsuit lottery over asbestos. UP/CSXT Express Lane wins
first load of "soft goods" with honeydews to NYC from California.
ending September 6, 2002
This week we look into cash flow and "owner earnings" -- what's
left over after the costs for plant expansion and replacement -- and
find a wide range of results for six class 1s and two shortline holcos.
BNSF's employee magazine tells how the railroad has brought the Industrial
Products business development process into line with 21st Century supply-chain
management practices. WATCO picks up another BNSF shortline. UP's Ike
Evans comments on the link between Trip Plan Compliance and Customer
Satisfaction. Consolidated Freightways files for bankruptcy. More on
trackage rights vs ownership, future of the Conrail Shared Asset Operation.
ending August 30, 2002
Why a shortliner sends regular marketing success stories to his connecting
class 1s, replete with estimated dollar projections, service agreements,
and the names of the larger roads' personnel facilitating the new relationships.
GNWR buys Utah Railway for $54 mm in an all-cash deal. Australian Wheat
Board projects 30% downturn in harvests -- RRA sees some revenue hit
in 3Q02. July carloads for RRA, GNWR up on acquisitions, down for same
railroad vs AAR's up a bit. Earl Durden's RMC to operate St. Joe's Apalachicola
Northern. CN moves Montreal intermodal facility to Taschereau from Turcot.
Editorial comment on rumors of CSAO breakup.
ending August 23, 2002
The entire focus this week is the UP shortline meeting and the opportunity
it afforded to get "behind the curtain" and see how the railroad
works. The attached report brings together the essential links between
and among performance measurement, customer satisfaction, and car movement
data quality. The main takeaway for shortlines is you can't fix what
you don't measure and without customer feedback you'll never know what
ending August 16, 2002
Notes this week on the effects of the continuing lack of rain on the
ag business; CSXT possibly better positioned than others. BNSF launches
a new logistic subsidiary. Amtrak fails again. P&W loses money for
the second quarter in a row but at least the operating ratio got below
100. UP hosts shortline meeting in Omaha this coming week with a terrific
carload story. Chart excerpts from Quarterly Review.
ending August 9, 2002
AAR Carloads for Week 27 show chems, automotive, metals to be the winners,possible
signs of better times to come. NS takes the lead in two shortline marketing
awards. BNSF's Matt Rose on business ethics. Pioneer Rail results report
and why we don't follow small rails. Trading strategies for rail stocks.
Quarterly Review preview.
ending August 2, 2002
Week wraps up with reports from GNWR, RailAmerica, FEC. I&M Rail
Link begins operations as Iowa, Chicago & Eastern as part of DM&E
link-up. Some members of Congress think small grain shippers are too
limited in their rail choices. Wharton's Jeremy Siegel on "Core
Earnings." Comparing YTD shortline carload growth vs class 1s.
ending July 26, 2002
Earnings Week was a lot of very good news and no real bad news.
There are no operating ratios in the 90s and four of the seven railrods
reporting this far had double-digit net margins. Four posted ORs below
80. And in most cases revenue gains were ahead of car-count gains indicating
better yields. No CEO seemed particularly daunted by the recent stock
market follies and all feel the economy is in relatively good shape.
The big take-away is that each of the seven railroads reporting to date
has specific carload niches to fill, and that's good news for shippers
and shortlines alike.
ending July 19, 2002
It was another brutal week on Wall Street with the DJIA down 7.7%
and 20% for the year, officially entering Bear Territory. The rails
as a group fared a litle better. UP, CSX and BNSF all stayed in the
down 2-5% range; NS tied the DJIA. Only KSC remained unchanged with
CP, CN and FEC all down about 3%. RRA lost a percent and GNWR was off
3% for the week. Elsewhere we look at the effect of expensing stock
options on RR earnings. Further details on the RRIF program in light
of the DME-IMRL transaction. June carloadings for GNWR and RRA. Grain
tariff and demurrage changes at BNSF. Earnings for WAB. And the UP earnings
ending July 12, 2002
The rails were no safe haven this week as they got caught like everybody
else in Friday's final sell-off. Weak earnings in paper industry may
bode ill for some shortlines. NS buys 21-mile private line from Peabody
Coal. Mike Ward tapped for President CSX Corp; others move up and out.
Ab Reese to leave KCS. Mount Hood Railway wins the third shortline RRIF
grant ever to be issued; Amtrak gets RRIF $mms in two weeks. Liquidity
as a measure of stock viability.
ending July 5, 2002
The stock market went nuts on a short day Friday and the rails
did OK. Monday will tell us more. Earnings week is almost upon us and
this week there's a chart and commentary on the importance of free cash
flow. UP had its 140th birthday Monday, celebrating with yet another
week of strong
traffic gains. Goldman Sachs begins its rail industry coverage with
favorable remarks re BNSF and CN. RailAmerica May carloadings front-run
the class 1s again.