Railroad Week in Review:
Second Quarter 2004
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CP's Fred Green says they ought to have a final answer on the D&H in
two months. Wall Street upgrades NS, BNSF; downgrades CSX, UP. (Go out
on the RRs and see why.) RailAmerica finalizes Aussie sale, doubles
its money. Reader wowed by Watco website. Progressive Rail gets good
reviews for accouting standards. Everett Railroad celebrates 50 years
Gary Marino retires from RailAmerica. Gus Pagonis hosts conference call.
UP turning away freight shipments. Jobs impact? Rail stocks more attractive
as traffic growth prospects improve. What high soy bean prices and demand
for covered hoppers might do to growers and users both. Watco may exit
Palouse River line in Washington state. Fourth quarter and full year
comps for KCS, FEC, GWR, RRA. TFM and KCS step back from arbitration.
Five shortlines and regional rails win marketing awards. Continuing
the contribution theme. Book on Warren Buffett has much meat for railroad
managers, for instance putting capital costs where they belong. Comparative
shareholder returns for eight railroads. Tables. How shortlines that
don't get it hurt those that do.
This week's REVIEW is five pages instead of the usual two. Exceptional
quarterly results from CN and NS. Monthly and yoy carload data for GWR
and RRA. Continuing the theme of shareholder returns as a measure of
management's success in representing the owners' economic interest in
the success of the enterprise.
Quarterly earnings from BNSF, CP, CSX, KCS, RRA and UP. Expanded table
of comparisons. Common thread is price increasing holding on greater
demand for rail services as trucking costs and highway congestion are
on the rise. UP operating income down 15% to $314 mm on congestion costs
even as revenue rose 6% yoy.
Quartery earnings from Florida East Coast, Genesee & Wyoming.
Conrail Oversight ends.Canadian National shortline meeting zeros in
on operating best practices.
company stocks up at twice the TTM rate of the DJIA. Buckingham Branch
shortline to operate former C&O Doswell line. Public Private Partnerships
(PPPs) lottery. A ride across Pennsylvania on Amtrak shows NS at its
best. P&W's first quarter disappoints. GWR and RRA carlaodings for April.
Synopsis of two key Watco strategy and finance sessions at Twin Falls,
Idaho. FRA says remote control locomotives in train and yard service
safer than manned units. Senate passes 4.3 cent a gallon fuel tax elimination.
House stalls. Prospects for coal improve. AAR Week 19 (May 20) carloads
compared with GWR's Q1 record. Chart.
RailAmerica gets the ex-PRR main from Crestline west almost to Chicago
via Fort Wayne and Vaplo. Iowa Interstate derails on CSX -- harmonic
rock suspected. BNSF taps new managers. WSJ says coal prospects up,
Midwestern corn and beans down. UP's Jack Joraleski takes the Tylenol
tack. Wednesday a great day for rail stocks.
stocks outperform DJIA for the week, YTD and three years; GWR, NSC and
BNI lead the industry in all three periods. More on harmonic rock. Calls
from investment bankers, stock brokers, and institutional investors
who, for a variety of reasons, have suddenly become interested in railroads
in general and shortlines in particular. The need for a marketable shortline
"brand" and how to create one.
running better than ever before and there is capacity to spare. Shortlines
that can build on this opportunity will be the soonest winners. Table
of estimated NS shortline revenues by commodity. The antithesis is UP
where the high costs of congestion are hurting even the best shortlines.
And why is UP paying north of a buck a gallon when NS and BNSF are hedged
a six months out at 80 cents?
RRA taps Redfearn President, Swinburn CEO. May carloadings for RRA,
GWR. AAR comps. STB Chairman polls Class I CEOs for appraisal of fall
rush readiness. STB Performance Measures, US rails' stock performance,
and 1Q04 results show striking parallels. Table. Norfolk Southern makes
"Zack's #1 Rated Stock List." Railpower Technologies Green Goat road
switcher shows promise.
stocks have a field day. Union Pacific charts' technical signs pointed
to a reversal of trends. Is this a $70 stock in 18 months? GBX has in
the last seven weeks received orders for nearly 7,000 railcars valued
at approximately $400 mm. Shortline car ownership up? Or are lessors
using marks of convenience. The 2-mile shortline with 30,000 cars bearing
its marks. NITL's Ficker says, "Shippers are like water running downhill:
they seek the course of least resistance." Why Unique Selling Points
and Competitive Advantage still count.