Blanchard Railroad Week in Review, Second Quarter 2015

The Railroad Week in Review:
Second Quarter 2015

Current Issues. Available in Adobe Acrobat format only. You will need the free Adobe Acrobat reader.

Week ending June 26
Why I think the intermodal model suits short lines and regionals. Class Is and short line revenue units
treading water in the 0-2% range. Performance metrics improving

Week ending June 19
Genesee & Wyoming revenue carloads thus far in Q2 have not met expectations; May North American carloads skid 22 percent vs. last year, with same-store loads down 17 percent. Norfolk Southern’s 14th Annual Short Line Meeting, its last in Roanoke, drew more than 300 souls; short lines seen as “fertile ground” for revenue and volume growth. Railway Age was in Chicago this week for its first-ever Rail Insights conference, structured as a series of conversations with industry leaders — no PowerPoints allowed.

[No Week in Review June 12]

Week ending June 5
FRA issues $6.8 million RRIF loan to the Arkansas & Missouri for refinancing the 2013 purchase of three SD70AC locomotives. Canadian National is buying 200 more domestic, 53-foot, temperature-controlled containers to expand its "cold supply chain capacity," Dow Theory, share prices, what's ahead for the economy. NS holds last Roanoke Short Line Meeting this week.

Week ending May 29
Providence & Worcester, always the last rail to report quarterly earnings, increased Q1 freight revenue 15% year-over-year. There was a $1.5 mm operating loss; comp & benefits remain stubbornly north of 50% of operating revenue. NS sees 4% revenue decrease this year, turning around in 2016. Delaware-Lackawanna operating contract with PNRRA renewed. UP's Lance Fritz tells Cramer the railroad's running better now, clear of port follies and other operational challenges.

Week ending May 22
ASLRRA's Darr gives eloquent testimony before House Rail Subcommittee. Cherilyn Radbourne helps make the case for strong merch carload network. R&N's Customer Appreciation Day train ride a howling success. Iowa Pacific selling Texas lines to Watco. Larkin on tightening capacity and options it gives carriers.

Week ending May 15
Rails spending more on dividends and share repurchases than on capex. Some positive news from the crude-by-rail sector. GWR North American Carloads for April down 5.5%. NS taps Alan Shaw EVP and Chief Commercial Officer, succeeding Don Seale.

Week ending May 8
BNSF first quarter results really knock the cover off the ball. Railroad highlights from State of the Freight, an annual publication from Wolfe Research in NYC. Intermodal boxes account for nearly half of all North American railroad revenue units year-to-date through May 2, 2015; carload commodity trends.

Week ending May 1
Why railroad revenue-unit counts for the first quarter are truly anemic. Norfolk Southern's first quarter results disappoint. Genesee & Wyoming first quarter consolidated revenues, particularly after non-GAAP adjustments, don't disappoint, though NA carload soggy outlook mirrors rest of economy.

Week ending April 24
CN posts double-digit revenue gains in everything but coal, and respectable volume gains in five of its seven commodity groups. Kansas City Southern total revenue slip seven-tenths of one percent to $603 million on 540,000 revenue units, up one percent. CP reports a 63.2 operating ratio, down nearly nine points, revenues up ten percent, and non-GAAP eps jumping 59 percent. UP first quarter revenue unchanged at $5.6 billion as total revenue units slip two percent, mostly on coal and intermodal.My take thus far: Very much encouraged that the roads are using this lull in volume deltas to fix the operating metrics and get costs out. We'll see how NS, BNSF and GWR do next week.

Week ending April 17
NS announces 1Q revenue and earnings shortfall. CSX turns lower fuel prices into "double-digit growth in operating income, net income and eps;" WIR drills down. GWR sees gains in North American carloads for March and the Q; RCP&E works its magic.

Week ending April 10
YTD carload comps for Class Is and non-Class Is. Table. Fewer, trains, fewer RTMs, same miles, more locos, yet rails running slower and not necessarily to plan. Why? Reading & Northern wins third Regional Railroad of the Year award from Railway Age: how they do it and what others can learn from their example.

Week ending April 3
Notes from the ASLRRA Annual Meeting in Orlando last weekend. Three themes from the Tony Hatch "Salon" Tuesday. CSX reconfigures its manifest train ops plan; reader comments pro and con.

THE BLANCHARD COMPANY
2041 Christian Street - Philadelphia PA 19146-1338
Roy Blanchard.215-913-7740 mobile, royblan@icloud.com
Laura Blanchard, 215-985-1445, lblanchard@rblanchard.com