I haven’t seen anything in the media about how the railorads are affected or what they’re doing to adjust to these difficult economic times.
There’s a short thread on this - “Bleak Outlook for Freight in 2009” - from about a week ago (actually, 12-11-2008), on Page 4 of 1231 of this Forum - at:
http://cs.trains.com/trccs/forums/t/143193.aspx
The included link to the subject article - which worked a few moments ago - is:
http://online.wsj.com/article_email/SB122895724389896631-lMyQjAxMDI4MjE4MTkxNTE3Wj.html
Beyond that, suggest checking out the AAR website, and/ or the latest quarterly financial statements from these carriers on the Web.
- Paul North.
Thanks Paul.
Hey, you’re welcome.
Just for fun, at random I went to Norfolk Southern’s website and looked at their 3rd Quarter 2008 press release, at:
http://www.nscorp.com/nscportal/nscorp/Media/News%20Releases/2008/earn3q_08.html
Here are the “highlights” from it - refer to the original document for a little more detail:
October 21, 2008
Norfolk Southern Reports Record Third-Quarter 2008 Results
For third-quarter 2008 vs. third-quarter 2007:
- Railway operating revenues increased 23 percent to a record $2.9 billion.
- Income from operations increased 31 percent to a record $894 million.
- Net income increased 35 percent to a record $520 million.
- Diluted earnings per share rose 41 percent to a record $1.37.
- The railway operating ratio improved by 2 percentage points to a record 69.1 percent.
Not too shabby, eh ? Cripes, if this is what happens to railroads in an “economic downturn” - What, me worry ? [with apologies to Alfred E. Neuman]
Hope this is informative.
- Paul North.
That is impressive…especially in view of the fact the NS has a complex route structure compared to the transcons and their relatively simple east-west/north-south routes. A 69.1 OR must be among the lowest in the industry as well.
One traffic area that remains strong is COAL… And NS is nothing if not a synonym for coal transportation.
I wouldn’t get too rosy. NS, BNSF and UP have all either announced layoffs or indicated there will be future layoffs within the last couple of weeks…
Traffic levels have dropped dramatically in the last couple of months and profitability from fuel surcharges has evaporated as fuel costs have dropped. In other words, lookout for that other shoe that’s about to drop. Q1 and Q2 2009 aren’t likely to be nearly as good…
LC
Profitability from fuel charges??? The surcharges were instituted to recover losses incurred because fuel costs increased while older freight rates remained in place. There was no intention for fuel surcharges to go to the bottem line, and they did not. They only recovered increased costs, after the fact which probably means there was money lost until the catch-up was institued.
Traffic levels have droped DRAMITICALLY ???. This is very subjective!! We need to avoid jumping on the doom and gloom talk which the news media is inclined to portray. The media has to fill the news 24-7 whether there is anything significant, so they may report without substanation, and especially if it is a negative report. BNSF had a great 3rd quarter which can be found if you look.
BNSF has furloughed employees which always happens during the winter, and they have reduced hiring new employees to replace those retiring. But their training program is ongoing so that they will have qualified people when spring arrives and when the economy picks up. The other Class 1’s are doing the same.
Keep one thing in mind guys! The 3rd quarter is the last period for which they’ve published results and that included the months of July, August and September. The financial “meltdown” didn’t hit until mid-September and the effects continue today.
The 4th quarter, 2008 will be the first period to really gage how the rail industry has been affected. However, don’t forget that several carriers have already made major announcements during the last several weeks, and none were very pretty.
Better check your facts again.
Regardless of intent, fuel surcharges have dropped $$ to the bottom line. Note that when they started fuel surcharges on the Class 1s were rate based and not mileage based as most have become after an STB ruling against the rate based surcharge. Rate based surcharges allowed different charges based upon commodity rather than tonnage resulting in higher charges for chemicals and other high value shipments versus lower value goods despite the tonnage moved being the same.
As to traffic dropping, you need to look no further than the weekly stats from the AAR. For the week of December 6th originating traffic is off an average of 8.0% including U.S. and Canadian roads and 8.5% for the U.S. alone. Weak spots are Forest Products off 10.6% and Autos off 20.4%. Those are some darn big numbers. No medi
On top of that, you have to allow that auto and forest products were way down in the fall of 2007 over 2006, too. The fall peak of 2007 - wasn’t.
There really aren’t any bright spots right now. Export coal, which was booming is now nearly dead acc’t a stronger dollar (part of what’s making oil cheap). Truckload domestic intermodal isn’t too bad right now - if you want to call that a bright spot. It is still cheaper to ship by rail than truck and rails carry a lot of “recession proof” commodities (e.g. chicken feed, utility coal), so they won’t get hammered quite as hard as some other industries.
On top of the fuel surcharges, the RRs took some pretty big base rate increases over the past few years. There are currently mixed opinions out there on how much of this they will be able to hang on to.
2009 is going to be pretty ugly. I’ll bet the story each quarter is going to be about the sucess of cost controls and attempts to hang onto existing rates.
Math question here: If the average is 8% down, and some sectors are 10.6% and 20.4% down, then some other sectors must be doing better than these 2 , in order to average out at 8%. Which sectors are those, and are any sectors up?
You can seach the web and find this kind of thing out. RRs have been posting on their web sites. Here is link for UP and NS.
http://www.nscorp.com/mktgpublic/MKTGMedia?inline=true&table=completed_reports&index=352
Don -
Thanks for digging these up and posting the links to them. Last night I tried to do that for BNSF, but had too many problems “loading” that webpage, and ran out of time.
These are the comparisons of carload (including container & trailer) levels of this year (2008) with last year (2007) for the Most Recent Week, the 4th Quarter To Date, and the Year To Date. Interestingly, NS reports the changes + or - in the raw number amounts / values (only), whereas UP reports the changes as percentages (only).
Summarizing them, it’s really a mixed bag. A few up, most down - looks like 10 % to 15 % [edit] overall, by the totals. across the board But that’s less than the much larger declines in motor vehicles, lumber and forest products, some metals, etc. If you’re really interested in this, you should look at these in detail.
Also, keep in mind the difference between the effect on the railroads (= their income and balance sheets), and the effect on their employees (= carloads and no. of positions, etc.).
- Paul North.
Thanks.
[sarcasm] It’s been suggested, that we on the forum should look up things on our ownm so as not to ask questions unworthy of reading. [/sarcasm] That’s easy to do, apparantly, if you know where to look. Thanks for providing the ‘where to look’ part of the equation. Your help is appreciated
BNSF and the others probably have similar - I was too lazy to look [;)]
I keep forgetting to just GOOGLE…guess I’m old fashioned.
From Traffic World today:
http://www.trafficworld.com/newssection/rail.asp?id=49008
Running Off the Tracks
12/15/2008
John D. Boyd
Associate Editor
The good thing about hitting bottom: There’s nowhere to go but up.
Some rail experts think that might be the case with rail freight, which in November had its biggest decline since the Association of American Railroads started keeping track in 1997.