Greetings;
Just a quick & light note before the BNSF report and following Review – first from the Tweets:
tuSimple's first customer for its AV truck lane in AZ is....a railroad! UP, already an investor (along with CN), will utilize T/S's "Driver Out" semi for drayage - at a time where that activity is a real supply chain bottleneck. And this could be a breakthrough year for AV trucking, though we have heard that before. At the big CES/Vegas show, according to the ATA, a panel thought that model year 2024 would be the inflection point. Meanwhile, Waymo and JB Hunt signed a deal to begin “fully autonomous freight operations in Texas”…. ”in a few years”.
The world’s a messy place:
- Russia and the Ukraine combine for over a quarter of world wheat exports – tough timing for North America with the current Canadian crop down over 30% and the coming US crop estimated down ~15%; JPM estimates outright hostilities could send oil to $120+
- Truckers in Ottawa – ugh. Impacting auto production already on both sides of the border. Clearly, Canada needs to come to grips with blockades – see CN’s prior experience. There was more news out of Canada – most of it pretty good, actually, especially if you are CN:
- The Federal government, having not much on its plate, is joining with the province of Saskatchewan to amend the (national) constitution to abolish a 140-year old tax exemption for CP in the province
- Prince Rupert port expansion plans continue – from ~1mm teu at present to 1.6mm by the summer and 1.8mm by 2024
- Transport Canada is now on record supporting and predicting that Canada will have its modified/updated form of PTC (ETC) – though no date was given….previously I had heard “a few years'' (which hopefully is not a cynic’s soon enough to report/far away enough to forget)
North American rail traffic was lousy in January. Really lousy. Historically lousy. This we knew – and comparisons were tough (IM, Steel, Ag), but it was bad, and a bigger hole to start the year that has pretty strong H2 expectations:
- Overall NA carload volumes were down 6.6% (only 3 of 20 commodities posted increases); intermodal down 14.7% making the total -10.9%. U-g-l-y. By nation:
- The USA came of relatively better than its neighbors, with carloads down “only” 3% (6/20), but IM down 14.6% meant the total was down almost 10%
- Mexico carloads were down 3.6% (8/20, not bad), but IM’s 14.9% drop moved the total to -8.6%
- Canada was a mess – carloads down 17.5% (zero of 20 – grain was down 35%), IM down 15%, and their total -16.3%
- The US was helped by a 5.6% increase in coal, following up on a surprisingly strong 2021 as this dead cat continues to purr. And the EIA thinks US coal production will be up almost 6% this year, although consumption is estimated to be down 2% in a flat electricity-generation market. That commodity (relative) bullishness, remember, was supported by commentary by UP and CSX – but surprisingly not by the NS….
Next up, the calendar: After a respite and a recovery, the road beckons:
- But we can stay home for this one – Progressive Railroading” is holding a rail-ESG webinar on February 24 featuring among others Janet Drysdale of the CN who we truly hope will revive the now-lost tale of Canapux! (see below for some details – it's 11 am-2 pm 2/24)
- SEARS (South Eastern Railroad Shippers) in Charlotte beginning March 1 with CSX’ Kevin Boone and GWR’s Mike Miller - SEARS-2022-SPRING-MEETING-agenda-v2.pdf (serailshippers.com)
- REF, the pre-eminent rail car conference the following week: REF 2022 (railequipmentfinance.com)
- Later in the spring, we’ll go to NEARS, NARS, and the ASLRRA (short lines); then in the late summer and fall it will all start up again (IANA, AREMA, etc.)
- And we can announce the date of the (to us, anyway) Big One: RailTrends will be November 16-16 in NYC (see below)
Congratulations to two long-time RT speakers on their major promotions and assignments:
- Norfolk Southern’s Michael (“Mac”) McClellan was named SVP and Chief Strategy Officer – well deserved and a sign of the McClellan family’s grip on the history of modern railroading
- Union Pacific’s Beth Whited was named EVP of Sustainability and Strategy, putting her on the front lines of UP’s future
Recent media of real interest that you might have missed:
- Trucks Are Clogging America’s Roads, Delivering Goods and Tearing up Yards - WSJ
- RailPrime: https://www.progressiverailroading.com/RailPrime/details/Tony-Hatch-on-CNs-Big-News-plus-his-take-on-the-current-Class-I-earnings-round--65760 ...
- Blackrock, owner of everything (OOF) gives their outlook: BII macro and market perspectives (blackrock.com)
- The Real Reason America Doesn’t Have Enough Truck Drivers - The New York Times (nytimes.com)
- A podcast with Logistic Management’s peerless Jeff Berman and the POLB’s estimable (and not just because he is a Dodger fan) Noel Hacebaga - https://www.logisticsmgmt.com/podcast/polbs_hacegaba_addresses_port_operations_and_the_intermodal_sector
And finally:
- It’s good to be king – old rail friend Bill Ackman turned his $200mm position around the pandemic into ~$4B. Deep into Schneider’s consensus-beating quarterly results was an intermodal OR of 82.8%
Anthony B. Hatch
abh consulting
http://www.abhatchconsulting.com
abh18@mindspring.com
Twitter @ABHatch18