I know the logical answer is all the railroads are feeling the pinch right now. Due to the variance in local economies and differing traffic mix, it would seem that the ecomomy affects each railroad differently-perhaps quite differently?
The same but different? Really no boxes or no coal or no autos is no money!..Ok, coal is moving for power plants…
What’s '“worst” ? [No points for the obvious jokes]
Carload/ Intermodal volume - absolute numbers or relative % declines - revenues - profits - P&L statement and/ or balance sheet ratios - employee layoffs - stored locos - decline in stock price - imminent bankruptcy - Class Is only, or incl. Class IIs and IIIs ?
You know, sometimes you tend to think like an engineer. [:P]
I was thinking in relative, general terms, based on each railroad being different. I know all the railroads are down from years past. That’s a no-brainer.
In my part of the world, BNSF is moving lots of grain. I thought that meant they had a lot of steady business, and life was good. I then learned, that all the grain was moving because it meant the shippers could get bargain rates right now, and BNSF was probably not making any money on it. So much for (my) ignorant optimism.
I’ve read where the energy companies are shipping in a lot of coal for stockpiles. Is that a case of the railroads having expanded coal traffic making money at contract rates, or is it similar to grain movement.
Similar thoughts: Intermodal from the coasts is down. That hurts railroads that are big into intermodal. Has that affected, positively or negatively, the traffic moving from Mexico and Canada?
How about, if you’re Class1 that’s not huge into coal or intermodal? Are CN, CP,KCS, getting along better than UP, BNSF?
Hey, I resemble that remark !
So, if BNSF is not making any money on the grain movements, then why is it doing that ? Or, are they ‘just covering the overhead’ with otherwise pretty much idle equipment, track, and people, or hoping ‘to make it up on volume’ ? [swg]
The other factor is seasonal - the 2009 grain crop is about to come in, and if the elevators haven’t been emptied out already, then perhaps ‘push has come to shove’ now on their available storage capacity ? Likewise, power plants usually start building up / reple
I would say the Huron Central Railway…they belong to the G&W family and are shutting down operations later this year. The railway operates on CP trackage between Sudbury, ON and the Soo and is very much dependent on a couple of accounts which are depressed due to the economy.
Yeah, ‘Out Of Business’ = corporate death pretty much ‘claims the pot’ in this context. [:(]
Of the 4 US roads, it’s probably NS that’s taken the biggest hit and made the fewest “adjustments”. NS took a major hit when the auto traffic tanked. NS moves (moved?) huge volumes for Ford. The auto traffic tends to have very high margins because of the level of service demanded. NS moves quite a bit of met coal and that business all but dried up with the auto downturn. This was also high margin traffic. Lower margin intermodal and domestic steam coal held up a bit better. CSX may be nibbling around the edges of NS with lower rates - it’s hard to tell, but nobody wants a full fledged rate war. NS managed to keep the merchandise network train service sized to the volume and hold service level up, but they were reluctant to cut people off, having just spent so much to hire and train them. (a longer term view - hurray!) They would prefer to be able to ramp back up quickly if/when traffic comes back. The net is that NS’s revenue went down faster than the others and their costs went down more slowly. The good news is that the RR is still solidly profitable.
Same calcs for NS and CSX, per data from their websites - appears to confirm what Don said above:
NS: +1.71
CSX: +1.18
EDIT - For UP: +1.07
The second quarter SEC filings (10K) are online for the 5 class 1’s (CN and CP) are not filed with the SEC.
Don’s assessment is accurate. NS has taken the biggest hit. Their second quarter revenue was down 33% from 2008. Carloadings were down 26%. The biggested drop was automotive at 52% drop in revenue and coal was very surprizing at a 34% drop. Further, their utility coal was down 15% and export coal was down a whopping 62%.
I am going to list several items below and hope the columns line up. The comparisons are for 2Q revenue, 2Q carloadings, and 2Q revenue per carload. Also are YTD revenue, YTD carloadings, and YTD revenue per carload.
Railroad 2q rev 2q c/l 2q $/cl ytd rev ytd cl ytd $/cl
BNSF -26% -19% -9% -23% -17% -8%
UP -28% -22% -8% -24% -21% -4%
CSX -25% -21% -5% -21%
Following ed / MP173’s format - thanks for setting that up for us here ! [tup] , here are the same figures for the Canadian carriers - sources are their 2nd Quarter Financials as posted on their websites:
Railroad 2Q Rev 2Q C/L 2Q $/CL YTD Rev YTD CL YTD $/CL
CN -15% -22% +9%* -9%* -19%* +12%*
-
- My math, and I double-checked it - the ‘****+’ is correct !&nb
So, based solely on the 2Q Rev. / CL, here’s the ranking, from ‘best’ to ‘worst’, with some arbitrary grouping by me:
CN +9 %
CP +1 %
CSX -5 %
What would be causing the Canadian carriers to have positive revenue/carloading?
The US rate structure was deeply reliant on the fuel surcharge system. What is different other than $ and C$)?
ed
Re-thinking this, it seems to me that ‘Revenue Car Loadings’ is the better metric to evaluate the economy’s impact on the railroads. The traffic is the first ‘necessary’ [but not sufficient, by itself] pre-requisite - if the traffic simply isn’t to be had, then there can’t be any revenue at all. Plus, that gets us away from the nuances of the fuel adjustments, and what the railroad decides to charge and its cost structure, which is more within their control.
So here are the rankings, reordered on the basis of RCL, from ‘best’ / least ‘hit’ , to ‘worst’/ most ‘hit’, for the 2nd Quarter 2009, again using the above numbers. Note that really, they’re all pretty tightly grouped - from BNSF’s -19% to NSC’s -26%:
BNSF -19%
KCS -19%
I saw from the freeway at UPs Colton Yard a solid line of locomotives parked, I milaged it to almost 2 miles long. It just went on and on from one end of the yard to the other.
At 70 ft. long each on average, that would be about 150 of them; at 60 ft., about 175 locos. And so despite the staggeringly dismal appearance, that would be what - less than 3 or 4 % of UP’s fleet of like 5,000 locomotives ?
- PDN.
I think one of Paul’s earlier postings may more accurately reflect the Canadian situation.
Based on one article I read ten or more years ago in a Calgary newspaper, several years after CP moved its’ HQ to Calgary, and a lifetime of watching the CPR do what the CPR does, I am going to make the following observation.
The article said the financial health of the railway depends on the big four commodities, Grain, Coal, Sulfur and Potash. When prices for two of the four commodities are good the railway breaks even, when three of four are good the company is making money, and when all four are good, then things are really good. Good in this context being a subjective evaluation by the producer involved. All other traffic is icing on the cake. This would have been before the intermodal boom, so I don’t know how that would factor in.
The government, through the Canadian Wheat Board still has some oversight over carload rates for grain, and I would think the rates for the other three would be set by long term contracts. So when prices are good the producers sell (and ship), and in times like these, not so much. But the gross revenue per carload isn’t affected in the same way railroads shipping manufactured goods are experiencing. Lower numbers of carloadings though means more costs spread over fewer cars and lower profit per carload. So the CPR is experiencing the same woes as all the other Class I’s but the impacts are more mitigated. The loss of merchandise and intermodal carloadings would affect the company the same as anybody else, but again not to the same extent.
The railway is hardly recession
Paul:
I saw similar number of UP units at Proviso earlier this spring. I estimated/counted about 75…and that was a conservative estimate. My guess is that every major yard has similar lines of locomotives.
Anyone have a report on Bailey/North Platte?
ed
The following stored locomotive data is from the September, 2009 issue of Trains Magazine, page 18:
RR Units stored March Units stored June Total Rostered Units
BNSF 700 1000 6750
CN 150 280 1820
CP 270 400 1700
CSX 495 &nb
In case you missed it: Rails bounce back. August 21, 2009 NEWSWIRE
Based on the story in today’s NEWSWIRE it would seem that the home country of the Class I railroad has less to do with improved financial health than the types of freight being hauled.
There is an amazing difference between the performance of CN vs. CP and the US Class I’s. However it will be interesting to see how long CN can maintain that lead. I admit this current increase in activity levels for CN is a mystery to me.
AgentKid