Greetings and an early Happy New Year!
Yeah, I promised the last one was my last, but I thought a quick note given the news from up North (Canada, not the North Pole) was warranted….I attached my note of last week as well (since everyone was – and is – out of the office). So this is my last missive of 2021 – I think, Knowing the Canadian pattern, there’s still time for a (late) New Year’s Eve Surprise announcement of some kind!
“THE VERY BIG STUPID is a thing which breeds by eating The Future. Have you seen it? It sometimes disguises itself as a good-looking quarterly bottom line, derived by closing the R&D Department.”
/Frank Zappa, 1989 as told to me by Chuck Samul, NY&A RR (see the NY&A in Newsday and their rock-star leader, attached)
From the Tweets (and please sign up!):
TCI ends its long, long, long silence to slag CN's board for "failing to attract" Vena to be CEO (is that what happened?), and asking it to delay the CEO pick until after the shareholder vote 3/22 – but with “wins” in getting new (as yet un-named) CEO and new (ditto) Chairman - what's TCI now remaining goal? It certainly upped the anger-quotient, noting the CN Board’s “history of failed CEO appointments” (presumably excluding the appointments of Tellier, Mongeau – and, yikes to investors, Harrison. And yet TCI still seeks four board seats - for 5%? Naming a CEO now must be priority number one. Yes, the CEO needs the backing of the Board – but who is to say that the Rebel (Gang of) Four will prevail, or that even so, they would object, since their stated number choice (JV) has, supposedly, withdrawn?
More from Canada, busy what with the NHL on Xmas suspension:
- Canadians are seemingly waking up to the fact that TCI owns a major block of CN and is the largest shareholder in CP – see this Opinion Piece from their paper of record, The Globe & Mail: Opinion: A clear and present danger for the continued efficiency of rail transportation in Canada - The Globe and Mail. But who’s to decide? TCI is from the UK (and has a fiduciary duty to its portfolio). Both carriers have “Canadian” in their title, but each as a huge/growing US presence (soon, Mexico for the CP) and current or historic US leadership, and each has global customers and truly international shareholders….This represents a quandary, if not necessarily an unprecedented one (see Gould, Jay). In this case, what really constitutes “foreign”? And how does one parse between passive, (who often own large share blocks of all of the railways, for example) active, and activist shareholders? Does the Canadian Competition Act rule over a fight to buy a US/Mexican railway? There are merits on Denton's arguments, which boil down to urging growth on one carrier and margin focus on the other, the existential issue at play here….
- CN Luck, continued: The Canadian Transportation Agency (CTA) ruled that, due to its success in hauling 9% more grain tonnage in the 2020-21 crop year, CN was above their Maximum Revenue Entitlement while CP was below theirs – which requires CN to repay C$2.5mm – another sign of the insanity of Canadian grain regulation and a lesson for all rail regulation (hello, Marty?) and makes us further nervous in the USA when we read “As prices rise, Biden deploys Antitrust team”, in the NY Times - all OK (I think) when discussing “Big Meat” (love it)but worrisome nonetheless – including this completely illogical sentence: “Administration officials say the biggest successes so far include blocking the merger of a large American railroad, Kansas City Southern, with a Canadian counterpart….” Oh, really?
- CN did announce a 7-year partnership with Google Cloud as part of their planned transition from PSR to (what I call) PSR 2.0 to DSR>
- CP, meanwhile, held serve, by extending in advance of the deadline their, contracts with two mega-major customers, Canpotex and Canadian Tire (though gosh I wish it was “Tyre”)
Late stocking-stuffers:
- Another good graphic on the Supply Chain “issue”, from the Christmas edition of the NYT (note – what word does not appear?): How the Supply Chain Crisis Unfolded - The New York Times (nytimes.com); for a great parable see the FT’s “O Little Supply Chain of Bethlehem” – also MSU’s Nick Little’s report, attached, on “transparency” over “mere” “visibility”….and some good stuff from Accenture.
- Booming air freight has caused backups at O’Hare and a shocking 1% decline in November volumes, against the normal pattern
- The NRF says holiday sales were up 8% (November 1-December 24) and up 11% over 2019 – but overall, despite the above, the “Dreaded Parcel Backup didn’t Happen (NYT)” – because of earlier shopping (part of the incentives retailers gave to smooth out their cycle, not unlike pricing/demurrage in PSR BTW), increased in-store shopping relative to last year, and necessary capacity additions….
- Self-explanatory (more NYT): Public Streets Are the Lab for Self-Driving Experiments - The New York Times (nytimes.com) the same publication has also taken Tesla and its shy leader to task for downplaying self-driving risks….although they/he did agree to halt video-gaming when driving
- But at the same time, Uber Freight and Aurora have banded together to test a pilot freight program in the lawless frontier of Texas in 2022, and the state of Indiana DOT plans to develop the “world’s first contactless wireless charging concrete pavement highway segment” in the next two years! Go Hoosiers!
- Will I see you at NRC beginning January 5th? 61c0ecb40aba340c31012b61_2022-NRC-Conference-program-draft-v11-as-of-12202021.pdf (website-files.com)
- The legal battle over the RailUSA between MIRA and the losing bidder strangely continues, postponing the needed ownership change, with legal letters flying back and forth and Dan Elliott somehow involved….
- We’ll begin 2022 with HUGE labor issues in front of us, notably the national rail negotiations, the ILWU and perhaps most critically MLB
So, did your Christmas arrive as expected? Hope so! Happy New Year!
Anthony B. Hatch
abh consulting
http://www.abhatchconsulting.com
abh18@mindspring.com
Twitter @ABHatch18