Inside This Issue
· Earnings Season Underway: What Do Railroads Have to Say?
· Revenues Soar, Costs Soar More: So Q3 Margins Worsen
· Less of a Mess: Operations Showing Clear Improvement
· Signs of Softness: Demand Goes Down as Economy Slows Down
· Weakness, Not Bleakness: Rail Freight Demand Still Solid Overall
· 55 Alive: UP Insists It Can Still Hit its O.R. Goal
· Fine Mines: Booming Coal Lifts CSX
· Enough is Enough: Industry to BMWED: No More Concessions
· Freight Mate: J.B. Hunt Hopes for Better Times Ahead with BNSF
Track Talk
· “Our customers are feeling better now. [But] I can tell you that we are far from where we need to be.”
-Jamie Boychuk, CSX’s Executive VP of Operations
Latest News
· Third quarter earnings season is underway, with Union Pacific and CSX both showing a y/y decline in profitability despite robust revenue growth. The problem was an even steeper increase in operating costs, aggravated by the much-discussed service meltdown that’s angered so many shippers this year. Both railroads, however, are showing significant operational improvements this fall as staffing shortages ease—all that hiring is having its intended effect. As for demand, certain areas of business are showing unmistakable signs of weakness as the economy sours. It’s perhaps most visible in the domestic intermodal market. It’s hardly a bleak picture overall though, with some product categories like coal still humming, and others like automotive rebounding with vigor from earlier slumps. What’s still unclear is how much damage a recession would cause for railroads, given all the demand they’ve been turning away while operationally hobbled this year. Put another way, even if economic pressure leads to fewer cargo shipments overall, there might still be enough to keep railroad pricing up and assets fully utilized. Of course, with better service, railroads hope to win more business from trucks, never mind what happens to total freight volumes.
· This week, Norfolk Southern, Canadian National and Canadian Pacific report, heralding more insights and updates on demand conditions, network fluidity, and
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