Blanchard Co Week in Review Overview

The Railroad Week in Review
The Argument.

Here's a shocker for you: half the short line railroads represented at the 2006 ASLRRA Annual Meeting may not be around for the 2010 session. Which half your short line winds up in depends on how you manage change. And that depends on how you use the information at hand.

The Railroad Week in Review is a change management manual and survival kit. For example, recent issues provided…

Four things you must do right now to stay in business as a short line railroad in this economy;
Names and numbers for the Class Is that are experiencing the best carload volume growth in which commodities and how to get a piece of that action;
A four-part discussion on all aspects of the Paper Barrier question and how you can manage your paper barriers for profit;
Potential danger signs in the trend toward "market pricing," given small Class I traffic volume increases and large operating expense gains, and how you can insulate yourself;
Suggestions of what Norfolk Southern's new Delmarva Business Unit may mean in terms of new short line opportunities;
Evidence that UP's new-found "earnings leverage" will help its merchandise carload business as well as provide better margins for short lines.

The Railroad Week in Review is the only industry newsletter devoted exclusively to the bottom-line health of short line railroads. Now in its tenth year, the WIR paid subscription list includes short line managers responsible for nearly 5 million revenue units a year.

These lines are the best run, top-performing short lines regardless of size. Some are new, some are old and together they operate more than 14,000 route-miles of railroad for an average traffic density of 350 units per mile, triple the Rule of One Hundred standard.

The Railroad Week in Review corporate subscription list includes as well every North American Class I in addition to the largest short line holding companies. Railroad customers in every industry from agriculture to waste products round out the list.

Published fifty Fridays a year, WIR provides a weekly forum in which readers can exchange views and ideas as well as see who's doing what and why to improve their bottom lines. Recent themes include paper barriers, car management, event reporting, the dynamics of the short line -Class I network and of course quarterly results for all the major carriers including carloads by commodity and complete income statements.

You may expect four things from The Railroad Week in Review. First, we will continue to emphasize what works best for the shortline-Class I-customer relationship. For example, senior managers from NS and BNSF have reiterated to me that me the most valuable shortline relationships are the ones that maximize the efficient use of the assets of both. We will push that idea.

Second, the Class Is are paying close attention to customer supply chains because the fortunes of the railroads and their customers are inextricably linked. WIR will thus increase coverage of trends in the usual merch groups from chems to forest products to aggregates and agriculture. Third, we will continue to discourage shortline managers' emphasis on the mechanics of running trains almost to the exclusion of the care and feeding of customers. With no customers you've got no reason to play trains. WIR will follow the money and talk ops only when it means making more money.

Fourth, WIR's quarterly earnings reports focus more on cause and effect in the carload business and less on what's happening bellow the line. I'm a firm believer that yoy oprating income changes tell one more about a company than eps ever will. The order will be commercial first, then financials and mechanics last. We'll carry that theme forward.

By way of disclosure, I am an active stock trader and since I know rails best they represent a significant portion of my personal investment portfolio. If Jim Cramer can hold "best of breed" in his Charitable Trust and talk about others in the same space on "Mad Money," and if the Motley Fool columnists can invest in what they write about, then so should I be able to invest in what I write about. I'm not a CFA working for a Big Firm issuing buy and sell recommendations; I'm an observer of the passing scene who is passionate about railroads and who has done some investing in what he believes in.

My commitment to you is that I'll announce any buy or sell decision up to ten days before I pull the trigger. I don't short as a general rule, though I will write covered calls to generate income on a slow-moving stock. The benefit to the WIR audience is I eat my own cooking, as it were.

To see past issues of The Railroad Week in Review, click on "public backlist" below. Individual subscriptions are $125 a year; corporate subs are $500 and permit distribution and copying throughout the organization. Shortlines with annual revenues less than $12 mm get a special break -- $125 with permission to share within the organization.

subscription information | public backlist

(updated 5/16/2006)

THE BLANCHARD COMPANY
2041 Christian Street - Philadelphia PA 19146-1338 (215) 985-1110 voice - (215) 985-1446 fax
Roy Blanchard, rblanchard@rblanchard.com
Laura Blanchard, lblanchard@rblanchard.com