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RR Reflections and More "Hellos & Goodbyes"

Tony Hatch - ABH Consulting
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Greetings;

 

What follows is a brief note to follow-up on recent “Hellos & Goodbyes,” discuss November traffic, and a few odds & sods….First, the tweet of the week and the biggest, yet totally expected bit of news:

  • In the least surprising vote since (fill in your blank) on Wednesday, CP voters favored the CPKC deal by 99%+ - KSU votes Today/Friday (and will top that %), with the successful Voting Trust to follow, and KSU shares will cease-to-be. The Last Big Railroad Deal is moving forward; The deal already has Mexican government approval and while I anticipate that the STB review will be lengthy (into 2023?), approval will happen.

 

Hellos and Goodbyes, continued:

 

  • Addition by subtraction?  Congressman Peter DeFazio of Oregon, Chairman of the (to rails) all-powerful House Transportation & Infrastructure Committee, burnished his HoF candidacy during the fight for the passage of the infrastructure bill; but for freight railroads, he seemed to always view the industry through a late 19th-century lens (a Daguerreotype?), so no matter what happens in 2022, this is good news for sensible rail oversight IMHO

  • Enter the Aussies, oi oi oi!  Macquarie via its US infrastructure fund has accomplished its long-time goal of creating a short-line holding company platform via the purchase of the two rail lines that comprise Rail USA.  Congrats!

    • One of which, the Grenada Line (MS) won runner-up Shortline of the Year (RA) – congrats!  The winner was RJ Corman’s Memphis line – huzzah!
    • And the CEO of Rail USA, the indomitable Barbara Wilson, was one of that same publication’s “Railroad Women of the Year” – Kudos (and to all of the listed women, which included long time RT contributor, UP’s Beth Whited)
  • Welcome (?) two new public-via-SPAC AV trucking companies, Aurora (“AUR”) and Embark (“EMBK”)
  • Goodbye LALB from the headlines?  Not quite, but empty imported containers are down ~1/3 since Halloween – meanwhile, while factory activity increased month/month in November (to 61.1 form 60.8) the “delivery index” also improved
  • Hello, more regulatory over-reach in the supply chain?  HR4996 would be the largest regulatory effort on steamships this century, in an attempt to get more containers into the Midwest (etc) they would regulate liner practices of keeping boxes at the port, as part of their supply chain strategy. Oy, vey…..

 

Rail traffic was….lousy in November as the continued (supply chain) congestion issues, labor shortages, chip shortages, grain problems and Acts of God around Vancouver all played a role – North American total freight rail volume was down 6.7%.  The breakdown was carloads down a tad (0.9% - 11/20 commodities showed increases) and intermodal down 11.7%.  By country, in order of issues:

  • Canadian carloads were down 8.3% (the impacts of the mudslides – and the crop issues can be seen in grain down 29% and coal -20%); 10/20 commodities were up.  Intermodal was down 21% bringing total traffic down 15%
  • The US total was down 4.5% (carloads up 2% though down a tad without coals almost 9% boost; 12/20) and Intermodal down almost 10% (-9.6%).  Grain was down “only” 7.4%, Forest Products were up 2.5%, Chemicals up 2.4%; Motor Vehicles down 14.3%
  • Mexico showed the impacts of the auto chip shortage (vehicles/parts -19%) and also the cessation of Lazaro Cardenas blockades (intermodal down only 1.2% despite the auto impact).  The totals were carloads down 4% (11/20 and total traffic down 2.6%

 

The CDD (environmental) grades were released, and rails did OK – CN and CSX got an A (glory!); NSC, CP, and KSU got “A-“ (perhaps the latter will jump up next year after the rollout of its hydrogen-powered locos, scheduled by YE).  UNP received a “B” – but this was before their “Climate Action Plan”, rolled out this week.  And BNSF, as a subsidiary, went unranked but the parent didn’t fare so well – Berkshire Hathaway got an….”F” - Warren Buffett’s Berkshire among CDP’s climate impact disclosure laggards | Financial Times (ft.com)

 

Some TV and other commentaries, including CBS and NBC on the Supply Chain (and even on rails’ role!) – reminder my commentary from FreightWaves and Northwestern/Sandhouse are “On-demand” and next week I will reprise my role in the long-standing hit from NEARS, “The Jason & Tony Show”:

 

Also:

  • The Transport Topics annual year-end list of the Global Top 50 Carriers showed no rails in the Top 10 though BNSF and UNP were # 11 & 12.  Also bunched together at 18-20 were CSX, CN, and NSC, respectively while CP was #29 and KSU juuuust making it at #50.  Yes, CPKC would be #24.  Number 1 was of course the railroads’ largest customer, UPS (JBHT was #25).
  • Labor looms large – the WSJ reports that expected labor inflation will be +3.9% in 2022, the highest since 2008.  While Kellogg remains on strike, and Deere’s seemed successful, rail labor still silently negotiates and the west coast dockworkers (ILWU) negotiations begin in January….
  • Oh really?  Treasury Secretary Yellen allows that inflation pressures “are no longer transitory”…
  • I didn’t see this coming:  The Globe & Mail ranked CN’s Board of Directors #1 in Canada – they got a 98/100 score….I am not making that up.

 

Anthony B. Hatch 
abh consulting
http://www.abhatchconsulting.com 
abh18@mindspring.com
Twitter @ABHatch18

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