I can’t seem to find a report for CN’s 3rd quarter on Trains News Wire. I saw reports for CSX, KCS, CP, UP and NS but nothing on CN. I would think a 53.8% operating ratio would be big news.
It’s out. They once again managed to get an incredible profit while traffic is down. Cooking the books and pinching pennies pays off.
I am not sure how they “cooked the books”, but I am not an accountant nor a financial forensic expert, but I can review financial statements fairly well for a ordinary guy.
Here is what I am taking out of their report:
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Carloads are down about 6% 3Q15 vs 3Q14 while revenues were up by 3% over the same period. Thus…
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Revenue per carload had to increase, which did occur by a whopping 9%. Now, CN could have either raised rates dramatically, increased the length of haul dramatically (which did not occur as ton miles dropped by 4.9%) or handled higher revenue freight in their mix. Overall CN raised rates dramatically on most commodities year over year.
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I like to look at revenue per car as a barameter of pricing power. Others might look at revenue per ton mile, but I can envision a carload and how many dollars are stuffed into that car more easily than revenue per ton. So, CN exhibited the following increases per carload:
Petroleum/chemical 7% increase per carload revenue
Metal/mineral 30% increase
Forest products 12%
Coal -3%
Grain/Fertilizer 9%
Intermodal 1%
Automotive 11%
Total system increase 9% per carload.
- Only intermodal (4%) and automotive (2%) showed increased carloads handled while forest products were flat. Petroleum/chemical was down 4%, metal/mineral down a whopping 25%, coal down 10% and
From what I have seen from all of the Class I’s is that this lean and mean drive to improve the OR has served them well in this period of declining carload numbers. But will one or more of them be crushed under the weight of new business when it no doubt comes back.
Bruce
My question is why does News Wire cover all the other railroads but not CN?
I missed the bulletin that we were now supposed to hate CN as well as CP. Do you have any “good” railroads up Canada way?
CN trained a lot of conductors over the last year and then laid them all off. That’s why manpower numbers are down. Also, CN drastically cut back on employee supplies such as batteries, lights, gloves, and earplugs, which lead to a massive shortage in supplies.
Pay systems denying penatly and bonus claims until put through the arbitration process allowed for less expenses as well.
Same thing happened with conductors down here, but it’s hard to get mad at the railroads, who were pilloried last year for being caught short on crews.
I’m sorry for the new hires-- I have an older friend who got laid off after only 3 weeks --but if they knew better than the railroads, they never would have applied.
It’s an unfortunate case of nobody being able to anticipate the economy, which does not exactly merit a scarlet letter.
As for supplies: Heaven forbid that a craft have to fork out for at least some of its own, if there’s such pressing need. Is a union carpenter not responsible for his own tools?
Penalty and bonus claims being subject to investigation and verification by the paying party? What next?!
So, we’re supposed to feel sorry for the multi-billion dollar corporation that doesn’t want to buy batteries for the lanterns? Really? So I guess the crews should have to buy their own $700 portables? C’mon… you can’t really compare a carpenter that needs a whole chest of tools to a RRer that only needs a few things every day (and are probably spelled out in the contracts).
Yeah, they can investigate the penalties, but most of them are so obvisouly valid, yet the company drags their feet on them. Both parties agreed to the contracts in place.
Mechanics, at least for trucking companies which are my customers, often have a built in “tool allowance” which is added to their hourly rate. Mechanics will often have well over $100,000 of tools in their kit. These are their tools and they are responsible.
I cannot see how a conductor should be purchasing their own batteries. This is a safety issue.
Regarding the layoffs…another issue with the Saudis flooding the oil market. Suddenly there is not nearly as much oil flowing and it trickles down.
Ed
I’d be a little careful of an argument that can easily be stood on its head.
Railroads provide one of the few good blue-collar livings still out there. I realize there are crybabies in every line of work. But if I were a railroader – an occupation I had chosen (nobody holding a gun to my head); working steady; and bringing home a paycheck in the 75K neighborhood – I’d try not to be one of them.
Would you go to a hospital that requires the physicians and nurses to purchase equipment and supplies they need?
CN makes a chunk of their profit in a declining business by having a suspiciously low operating ratio which they achieve by cutting costs like these. It’s short-term because executive compensation is based on current results, not looking to the future. Bean-counters can always find line items to cut. Having executives to grow a revenue stream requires creative vision. Guys with that talent don’t work for railroads because it is not welcomed.
Why are the accountants always made out to be the villains in any situation like this? They may analyze the data and provide the required breakdown of how much is spent and on where it is spent but they don’t make the decisions.
You think someone working under a contract is a crybaby because they want to hold the company to that contract?
Unreal.
Not villains, just limited in what they can do concerning the revenue sde.
The meme about ‘not being forced to work somewhere’ is a stock rationale from those of a certain ideology. Perhaps a no-contract work arrangement is what their real agenda is?
We went through the whole battery thing where I worked years ago.
Hard to take the managers seriously when they are wearing company-provided Under Armour polo shirts with the company logos stitched on them. That money could have bought several batteries.
All about prioirites.
Because they’re easier targets than salesmen? [:o)]
-Says the 33 veteran of the evil sales team who now belongs to the evil management team. [}:)]
In a free market economy, don’t you believe that railroaders are paid what they are because they are worth it? Would you feel better about the trains running through your town if the railroad industry was run like the packing plant industry?
Yes to the first question, no to the second. Railroading on the cheap is what gave us Lac Megantic.
You will review my posts in vain, on this and other threads, for a hint that I think railroaders are overpaid. What I will say, as a former railroader myself:
There are those rails who, the big issues having been resolved generations ago, will micturate and moan about some of the pettiest stuff. I don’t know if railroading made them that way, or if they were born with a sour stomach. But t