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?
Thanks to Chris / CopCarSS for my avatar.
The same but different? Really no boxes or no coal or no autos is no money!...Ok, coal is moving for power plants..
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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 ?
Paul_D_North_Jr 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 ?
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' ?
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 / replenishing their preferred 90-days' worth of coal burn stockpile around now for the winter season. Sure, if I were the shippers, I'd be asking the railroad for the best deal for a definite shipment right now, as opposed to maybe one later when things are busier, and drive a hard bargain for that - just like every other buyer of anything else right now.
Let me suggest this little study and metric, then, for each of the 7 Class I's, for the most recent financial quarter - i.e., April - June 2009:
List the decline in total traffic volume from the same quarter last year, as a percentage.
Then list the decline in profitability on the same basis.
Then divide the decline-in-profitability-percentage by the decline-in-traffic-volume percentage. That will result in the change in profitability - i.e., loss - per 1 per cent change of volume. 'Low man' wins, as in golf - 'high man' loses.
F'r instance, here's what I got for BNSF, from its website:
Volume, Cars/ Units: -18.65 %
Earnings Per Share: - 9.92 %
Ratio, % Change in EPS / % Change in Volume = -9.92 % / -18.65 % = +0.53
'Your Mileage May Vary'.
Alternate and more sophisticated 'metrics' invited - but please include an explanation for those of us who may not be so well-informed.
-Paul North.
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.
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
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
- PDN.
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% -19% -3%
NSC -33% -26% -10% -28% -23% -4%
KCS -30% --19% -15% -28% --21% -13%
From the SEC filings, CSX's coal was down 20% for 2Q vs 34% for NS.
Union Pacific was affected by automotive with a 52% drop in auto revenue in 2q.
One could spend considerable time and energy analyzing these numbers, but when viewing the UP vs BNSF and the CSX vs NS (market competitors) the numbers are fairly similar except for NS's big drop.
Regarding NS's dependence on Ford...perhaps that will be a blessing going forward. How did the bankruptcy of GM and Chrsyler affect the railroads? Did they write off large receivables?
The big number that jumps out at me is the drop in revenue per carload, particularly for the western carriers (UP, BNSF, and KCS). That is attributed in their filings to reduction in the fuel surcharge revenue.
I havent looked at the weekly carloadings lately, perhaps those numbers show a little light at the end of the tunnel (instead of darkness at the end of the tunnel for 2Q). Obviously the drop in carloadings all accelerated in 2q vs previous year. Not a good sign.
It wasnt too long ago this forum had discussions on "what recession". Well, the numbers are downright sobering. As someone whose income is solely based on selling, this is as bad as I have ever seen it. Not only are revenues down, but each and every opportunity is being aggressively priced by customers.
ed
Following ed / MP173's format - thanks for setting that up for us here ! , 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 ! That makes sense, too, when you look at the data and think about it - the 2Q and YTD revenues didn't drop quite as much as the 2Q and YTD carloadings did.
Railroad 2Q Rev 2Q C/L 2Q $/CL
CP, incl. DM&E -24% -24% +1%
YTD Rev YTD CL YTD $/CL
-18% -21% +4%
[From Page 4 of 5 of the 'Summary of Rail Data' at:
http://www8.cpr.ca/cms/English/Investors/Earnings/default.htm
then click on the link for 'Summary of Rail Data' ]
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 %
UP -8 %
BNSF -9 %
NSC -10 %
KCS -15 %
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$)?
Re-thinking this, it seems to me that 'Revenue Car Loadings' is the better metric to evaluate the economy's impact on the railroads. The traffic is the first 'necessary' [but not sufficient, by itself] pre-requisite - if the traffic simply isn't to be had, then there can't be any revenue at all. Plus, that gets us away from the nuances of the fuel adjustments, and what the railroad decides to charge and its cost structure, which is more within their control.
So here are the rankings, reordered on the basis of RCL, from 'best' / least 'hit' , to 'worst'/ most 'hit', for the 2nd Quarter 2009, again using the above numbers. Note that really, they're all pretty tightly grouped - from BNSF's -19% to NSC's -26%:
BNSF -19%
KCS -19%
CSX -21%
UP -22%
CN -22%
CP, incl. DM&E -24%
NSC -26%
With regard to the Canadian railroads, and their apparent increase in revenue per carload - I'll have to look into that further and get back to you on it. Where's Ulrich to weigh in on this ? He ought to be pretty familiar with the implications of the US$ and C$ exchange rates and cross-border traffic, etc.
- Paul North.
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.
Have fun with your trains
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 ?
Paul_D_North_Jrthe 2Q and YTD revenues didn't drop quite as much as the 2Q and YTD carloadings did.
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 proof it is just affected in a different way.
AgentKid
So shovel the coal, let this rattler roll.
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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?
MP173 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?
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 495 600 3800
KCS 100 240 850
NS 119 400 4000
UP 1300 2000 8500
Mike
Paul_D_North_Jrthe implications of the US$ and C$ exchange rates and cross-border traffic, etc.
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.
I heard PGR is pretty hard hit by this economic downturn. I wonder what happened to their load planner.
RRKen I heard PGR is pretty hard hit by this economic downturn. I wonder what happened to their load planner.
Ran off with Eleanor Roosevelt last I heard.....
AgentKid 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
CN probably benifets from direct North/South traffic (south to Gulf of Mexico and Mexico) which CP would have to share; CP is as much an East/West railroad as CN though.
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