Railroad orders 22 new high-horsepower locomotives to handle additional traffic
http://trn.trains.com/news/news-wire/2017/04/25-cn-earnings-q1-2017
Brian Schmidt, Editor, Classic Trains magazine
Terrible news for those who think the operating ratio is the key metric. After all it has become slightly worse. Of course profit increased quite significantly, but who cares about that minor aspect. (sarcasm)
Lumber tariffs are going to hurt CN going forward. I predict second quarter results won't be good.
Ulrich
Expand on teh lumber tariffs please.
Ed
The USA imposed 20% tariffs on Candian softwoods aka pine and fir today. Meaning less loads of lumber for the USA on the CN and CP heading to the USA.
Trump has imposed a 20% tariff on Canadian softwood lumber entering the United States. The American lumber industry claims Canadian lumber is grown largely on crown land and is therefore unfairly subsidized (among other points of contention). This is unfolding now and over the next few days.. looks like an all out trade war is looming. Explains why CN stock price is down sharply today inspite of a fairly decent first quarter showing.
UlrichTrump has imposed a 20% tariff on Canadian softwood lumber entering the United States. The American lumber industry claims Canadian lumber is grown largely on crown land and is therefore unfairly subsidized (among other points of contention). This is unfolding now and over the next few days.. looks like an all out trade war is looming. Explains why CN stock price is down sharply today inspite of a fairly decent first quarter showing.
Time to build a wall on the Canadian border.
Never too old to have a happy childhood!
Well it's about time we got some attention up here from you guys.
Plus the USA, Trump administration, is claiming we have a protectionist dairy industry effectively blocking your dairy from being imported, milk and cheese, that sort of thing. Well yeah we do. So keep your "American Cheese", we keep the good stuff. ( we also have waaayyy better chocolate bars and the ever dangerous and banned from the USA Kinder Eggs.)
Since I'm still a bit "cheesed off" about the zero outcome in the war of 1812 I say bring it on. Just beware of our Department of D-Fence!..and we will throw Kinder Eggs at you!
Likely outcome...we lower our dairy protectionism, making folks in Wisconsin happy and you lower the softwood lumber tariff to something acceptable that makes folks in Oregon and BC happy enough.
We will not however, under any circumstances, take back Justin Beiber or Celine Dion or Jim Carey for that matter. All your's, free of charge. Enjoy.
Sadly we don't even have free trade within our own country. Maybe this will be the impetus that is needed to improve trade between provinces and with other countries. This is what happens when one relies on only one market. We've got CETA now.. and there is some talk now about free trade with China.. let's get on with it already. No fault of the Americans here... our fault for allowing ourselves to become too dependent on one market over the last 30 years.
This softwood lumber dispute has been ongoing since the 1980s; the issue has been to the WTO and other international bodies for resolution time & time again, and time & time again they have ruled in Canada's favour.
Those Americans just don't know when to quit. And since the last agreement on the softwood lumber trade expired in 2015 we have been due for an escalation of the dispute ever since, regardless of who became President.
The dairy subject is a different issue, caused more by gross overproduction in the U.S. than anything else. Some of the Wisconsin farmers who are being put out of business said as much when they were interviewed on the news, and even they said they do not blame Canada for their predicament. El Presidente is just trying to rile up his core base again and distract from other current issues less flattering to him.
But my main point is that the U.S. loves free trade until it negatively affects them, then it's time to roll out the protectionism.
Greetings from Alberta
-an Articulate Malcontent
Canadian National made a wise decision to acquire ICG and was shrewd enough to also buy EJE to give a bypass for Chicago. CN's 'T' shaped network gives it access to the Pacific coast, the Atlantic coast and the Gulf, a useful protection against changes in global trading patterns.
CN has a strategic advantage that other Class I's do not have.
IslandManCN has a strategic advantage that other Class I's do not have.
Except when it comes to hauling softwood lumber when a tarriff is slapped on (heh-heh).
I took a quick glance at CN's results last night and was perplexed. While the revenue, carloads, etc were all up (very significantly) the revenue per revenue ton mile and revenue per carload were both considerably lower.
I couldnt quite wrap my mind around why that would be.
Any ideas as to why?Ed
MP173While the revenue, carloads, etc were all up (very significantly) the revenue per revenue ton mile and revenue per carload were both considerably lower.
According to some of the reports I heard, CN was negativly impacted by higher fuel costs, unfavourable exchange rates, and higher costs related to harsher winter conditions. CN and CP both report in Canadian dollars. I also heard that CN experience an average drop in haul distance, which wouldn't have affected revenue per ton-mile, but would have impacted revenue per carload.
CP's report mentioned the fuel cost issue, the exchange rate issue, and winter related problems, but they were not impacted by the length of haul problem.
Bruce
So shovel the coal, let this rattler roll.
"A Train is a Place Going Somewhere" CP Rail Public Timetable
"O. S. Irricana"
. . . __ . ______
MP173I took a quick glance at CN's results last night and was perplexed. While the revenue, carloads, etc were all up (very significantly) the revenue per revenue ton mile and revenue per carload were both considerably lower. I couldnt quite wrap my mind around why that would be. Any ideas as to why?
An idea as to why would be that they've got capacity so they're going after business at the margin.
Such new business is will drive average revenue per ton mile and average revenue per carload down. But it will increase profitability while doing so. And that's the main goal.
greyhoundsAn idea as to why would be that they've got capcity so they're going after business at the margin.
Luc Jobin(sp?) the new CEO spoke about that very thing a short while ago. It was reported in a Newswire story.
SD70M-2DudeBut my main point is that the U.S. loves free trade until it negatively affects them, then it's time to roll out the protectionism.
Oh, don't lump us all together. Many of us do fully support free trade. It's just that the average US voter is illiterate with regards to economics. Economics is, at best, marginally taught in high school and optional in college. This lack of knowledge allows special interest groups, and their supporting politicians, to confiscate additional income for themselves. We do not have many journalists who know enough to see through the BS and actually report conditions as they are.
What that lumber tariff will do is raise the cost of lumber in the US and harm people. That's it. But few folks undestand that and there just ain't nobody who's gonna' explain that to them. This goes well beyond President Trump. He didn't start it and he won't finish it. It's a systemic problem that isn't about to get fixed.
As to the US dairy industry, they think their cow manure doesn't stink. They seem to think they've got a God given right to other people's money.
http://aic.ucdavis.edu/research1/DairyEncyclopedia_policy.pdf
Read the final remarks about how the US dairy industry gets it hands on other people's money through government programs.
We'll get through these things. It's just unfortunate that we have to get through these things.
I went back and looked at the financial info in more detail. The following experienced revenue per carload DROPS:
Petroleum/Chemicals from $3778 to $3720 (per carload)
Metals/minerals from $1742 to $1556 (big drop...possible shorter haul?)
Intermodal from $1325 to $1306.
Meanwhile, intermodal loads increased from by 45,000 with intermodal revenue increasing by $49,000,000 or an average of $1088 per increased load....ASSUMING the previous book of business remained the same pricing.
That is quite the haircut to take for new business. Meanwhile RTM per carload increase by 10% which indicates the new business is being hauled 10% more miles....correct? Help me out if the math is wrong.
Now, I will say this...CN runs a very efficient intermodal operation...at least here in NW Indiana. I got stopped by westbound Montreal - Chicago train 149 last week and counted 360 containers. That is a big train and big revenue.
Perhaps CN took advantage of CP's intermodal issues but if I were paying $1325 per load now and saw that new business was at $1088 I would be asking for a similar haircut.
Full disclosure...I own CN and have for nearly 20 years (since IC merger).
Love the railroad and the stock returns.
So I just saw on the news wire that the USA, Canada and Mexico have agreed to renogotiate NAFTA. We will see what comes out of this!
This time they should include a clause that calls for a review of the Agreement at regular intervals.. every five years sounds reasonable. That way no one is blind sided, and the Agreement can be updated to reflect changes in technology, etc. Also include lumber and dairy. Personally I prefer bilateral agreements.. but NAFTA already exists so maybe tweek it as needed and go from there.
Ulrich,
Regular reviews of the terms of NAFTA sounds like a good idea. The U.S. and Canada have long been good trading partners with open borders between them. Mexico is the interloper in the equation, and, due to their lower labor costs, many American and Canadian jobs, much to our mutual chagrin, have migrated there. I'm not panning Mexico for their wanting to get a piece of the action but in doing so they have taken advantage of their economic situation to the detriment of the other two nations.
Norm
MP173 . . . but if I were paying $1325 per load now and saw that new business was at $1088 I would be asking for a similar haircut. Full disclosure...I own CN and have for nearly 20 years (since IC merger). Love the railroad and the stock returns. Ed
(Me too!)
- PDN.
MP173ntermodal from $1325 to $1306. Meanwhile, intermodal loads increased from by 45,000 with intermodal revenue increasing by $49,000,000 or an average of $1088 per increased load....ASSUMING the previous book of business remained the same pricing. That is quite the haircut to take for new business. Meanwhile RTM per carload increase by 10% which indicates the new business is being hauled 10% more miles....correct? Help me out if the math is wrong. Now, I will say this...CN runs a very efficient intermodal operation...at least here in NW Indiana. I got stopped by westbound Montreal - Chicago train 149 last week and counted 360 containers. That is a big train and big revenue. Perhaps CN took advantage of CP's intermodal issues but if I were paying $1325 per load now and saw that new business was at $1088 I would be asking for a similar haircut.
Well, yes. If you try to charge different customers substantially different prices for the same service, from the same origin to the same destination, on the same commodity, you're looking for trouble.
But it's hard to tell that's what CN is doing from "averages". We're guessing here. We have no indication that they're doing any such thing.
"Marginal" or "Incremental" business can be something very different. In intermodal it can well relate to the drayage expense. And the knowledge that the competing truck rate determines the possible intermodal rate.
You can increase the railroad's profitability by absorbing the higher drayage expense from more distant points. This will reduce the railroad's per load line haul revenue; but then, it's incremental business. And it puts money on the bottom line.
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