Q3 earnings releases for several carriers boast record earnings at a time of massive job loss, foreclosure, and tremendous stock market declines.
Makes one wonder if their fortunes at a time great misfortune (including many other parts of the transportation sector) will draw greater scrutiny from regulators as to how they can acheive this record performance at such a time?
And yet, only one or two railroads are earning their cost of capital–that’s extravagent?
We should be thankful that railroads aren’t going the way of nearly everything else, and have been able to get by (for the most part) without coming up with hat in hands.
(Chad, I need your popcorn smiley–I’m going to be a spectator on this one from now on!)
I hate government economic regulation.
If a company is loosing money, they get upset.
If a company is making money, they get upset.
If a company wants to burn coal, they go totally nuts…
$4.00 and higher fuel during the spring and summer months, meaning that many of the trucking companies-some that never used rail in the past-moved their trailers on the rails. That’s were the record earnings came from.
Quick question, do earnings=profit?
I question the premise that suggests a relationship between high earnings and bad times. I think the high earnings reflect the recent relatively good times, coupled with the general ascendancy of freight rail over the longer term, whereas the economic downturn is only just beginning, if it happens at all. What is causing the misleading perception of being in the midst of dire bad times is the media promoting them over the last six months as part of their political agenda.
So the question of the moment is whether we are headed into a severe downturn or not. The government has been busy trying to prevent one as though they were protecting us from another hurricane Katrina. So, on the surface at least, that is reason to believe that an impending recession has been muted. On the other hand, the promise of higher taxes, energy rationing, and the destruction of the coal industry bode for bad economic times ahead. But it may just be, that in the next few weeks, it all goes poof, and we see that the perception of an immediate, oncoming recession just disappears because it was only smoke and mirrors.
The Q3 I assume you mean July to September. The ecomony didn’t start going into the toilet into October. Just HOW would the ecomony tanking in October affect third quarter profits?
You betcha - mainly fuel-efficiency & cost-advantage related. Also, not even all was this intermodal - much might have been carload freight, that would have otherwise gone by truck. Or, because the truck prices were higher account of fuel costs, the rails took advantge of that with price increases/ fuel surcharges - whatever it’s called, it goes to the bottom line. Plus, large volumes of certain commodities - I’m thinking grain & ethanol.
In comparison, consider motor-scooter and motorcycle sales (not necessarily high-end motorcycles, though): I’m sure those have skyrocketed due to high gas prices and much better fuel economy, for those people who can use them. Would/ should the government regulators (if there are any - I don’t think there are, though) of those businesses be justified in restricting those windfall profits ? That would be the antithesis of a free-market economy model. (Not to say that it won’t happen, but it shouldn’t.)
Finally, as others noted above, the time-lag between the traffic and billing in the 3rd Quarter (July - Sept.) and the reporting of results now (early Nov.) gives a misleading impression. Don’t depend on the media to explain that, though - it’s beyond their “sound bite” mentality.
I think it was the result of higher pricing and expanded fuel surcharges. Overall, volume has been pretty flat all year.
I have to disagree about the timing. The economy has been slowing all year. It hit the fan, at least as the news media is concerned, in October.
Has anybody considered, that maybe the reason for higher earnings, is that rail shipment is, at this point, in "the right place, at the right time’?