The Railroad Week in Review:
First Quarter 2014

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Week Ending March 28
NIT League opens access-hearing at STB; I see negative implications for short lines. Canadian government looking to expand reciprocal switch zone radius and force rails to do more work for the same money in grains; could it spread to other commodities? Truckers gaining some leverage in pricing though driver turnover (sometimes 100% a year), hours-of-service and more stringent driver controls are limiting availability of resources. Short line commodities most susceptible to dry-van competition continue to slip year-over-year.

Week Ending March 21
Low-yielding short lines are still leaving the fold with some being absorbed and others filing for "discontinuance," in STB parlance. Blanchard benchmarks for following the money updated. FEC 2013 freight revs up 14% on 6% vol gains, OR comes down nearly 5 points. Barclay's cites UP's "solid operational performance." Sorting out crude oil and petroleum products in AAR and Class I commodity reports.

Week Ending March 14
BNSF total 2014 freight sales plus "other revenues" came to $21.6 billion, up five percent, on 10.1 million revenue units, up five percent. GWR Feb 2014 carloads for North America increased two percent over Feb, 2013, negatively affected by severe winter weather at most North American regions. Across the railroad universe, volumes of stuff moving in boxcars - forest products, processed foods, metal products - do not inspire a great degree of confidence. Maggie Silver passes at 88.

Week Ending March 7
Report from Railroad Equipment Finance 29 in La Quinta, Calif. Things You'll Never Hear Elsewhere But Ought To. CSX 25th Annual Shortline Workshop sees 240 souls representing 184 railroads; added attraction: all-afternooon "Communications in a Crisis" seminar drew a third of the attendees, mostly senior people. Minor correction to last week's note on crude-oil train reroutes.

Week Ending February 28
Why and where crude-oil shipments on short lines and regional railroads are big business. AAR operating standards. Weekly traffic summary; why sequential changes can be more important to short lines than year-over-year trends. Table.

Week Ending February 21
Florida DOT and the FEC making significant progress on their brand-new Intermodal Container Transfer Facility (ICTF) at Port Everglades. KCS shares take big hit as the lower house of Mexico's Congress approves a bill to increase rail competition. Union Pacific's Jim Young passes away Feb 15 following a two-year bout with pancreatic cancer. Why Wabco has to be the real sleeper of the railroad group. CP and CN say they're going to start charging more for movements of crude oil in older tank cars; BNSF asking for bids to build its own fleet of 5,000 modern tank cars.

Week Ending February 14
GWR has competed its first full year of RA ownership and the results are encouraging; outlook for the Rapid City, Pierre & Eastern. Q&A tells us a lot about their approach to the business. GWR January carloads slip mainly on weather-related operating patterns of both railroad and shippers. A reader takes exception to my thesis that revenue is the biggest driver of operating earnings. This just in: CN raising rates on crude oil in older tank cars.

Week Ending February 7
Cyclical sectors [transportation is one] have been underperforming more defensive sectors; why Industrials could still outperform in 2014. How the fourth quarter railroad earnings season spread the first place awards around pretty evenly among the six Class Is reporting. Radbourne: Q4 execution continued to be very strong industry-wide in spite of the harsh December weather. Crude-by-rail is less than two percent of Class I revenue-unit volume; questioning the risk/reward proposition.

Week Ending January 31
Canadian Pacific's fourth quarter results go to show what happens when one gets one's operating house in order. Canadian National total Q4 revenue increases eight percent year-over-year to C$2.7 billion. A chorus of KCS doubters remains on stage, and perhaps it has partly to do with the recent hit "emerging markets" - of which Mexico is one - are taking on The Street. Indiana Rail Road and Pan Am Railways are the AAR's newest full members. Florida East Coast Railway adds 24 new GE ES44C4 locomotives to its road fleet.

Week Ending January 24
Strong earnings reports from NS, UP, KCS. Tea leaves pointing toward a more robust merch carload environment in 2014. Fortress wins MMA "stalking horse" bid. Tony the K takes the wraps off Railway Equipment Finance v. 28.0 for March. You heard what the carrier CEO's were thinking at RailTrends in Nov; now's your chance to become an expert in equipment sourcing, management and finance at REF in Mar.

Week Ending January 17
GWR December loads increase 12% on a pro forma basis. A ride on VIA's Canadian Vancouver to Toronto. CSX fourth quarter not exactly a barn-burner; lack of analyst interest in the merch sector (63% of RTMs) disappoints. BNSF quarter-to-date loads up 6% through Dec 28. NS and UP report next week; Canadians the week following.

[no Week in Review January 10]

Week Ending January 3
GWR buys western half of former DM&E from CP. Old Man Winter wreaking havoc on CN's AAR Performance Metrics; CP not as much. NS review and outlook from Jim Squires. Book review: Harriman vs. Hill by Larry Haeg.



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