Ships and Chips

Railroad Weekly June 13, 2022

Inside This Issue

·   Chinese Ships & Microchips: Uncertainty Lingers for Container Imports, Autos  

·   Won’t You Be My Labor? Railroads Hiring, but Impact Muted by Attrition

·   O.R. Scar: Union Pacific Sees Worsening Outlook for Operating Ratio   

·   Kansas City Giddy: Canadian Pacific Shows More of its Merger Fervor

·   Where’s My Railcar? The Race to Track What’s on the Tracks

Track Talk

“NAWG is concerned the merger of the Kansas City Southern (KCS) and Canadian Pacific (CP) railroads will result in decreased competition that will negatively impact the production, distribution, and price of certain chemistries of critical importance to American agriculture.”

-The National Association of Wheat Growers, in a filing with the STB

The Latest

·   On Wednesday, the U.S. Federal Reserve will announce its next move on interest rates. With annual inflation running at close to 9%, the Fed will certainly raise rates again, probably by another half-point though possibly more. The idea is to take some spending power out of the economy, to force suppliers to lower prices. But that risks a recession, signs of which North America’s freight railroads are closely monitoring. They don’t see anything too negative yet though, at least according to a series of assertions at various investor conferences hosted during the past several weeks. At another one organized by UBS last week, Union Pacific and Canadian Pacific both reaffirmed their upbeat assessment on demand. UP, however, did dial down its optimism about its operating ratio for 2022, pressured by higher diesel fuel prices and ongoing operational woes tied to understaffing. Generally speaking, railroads will do well on the revenue side if there’s strength in demand for commodities, construction