Author Topic: Rail Traffic down 20 consecutive weeks  (Read 3263 times)

IndyHog

  • Superintendent
  • *****
  • Posts: 1227
Rail Traffic down 20 consecutive weeks
« on: June 18, 2019, 10:55:13 AM »
US rail traffic fell
Overall, US railroad companies’ traffic volume fell for the 20th consecutive week in Week 23, which ended on June 8. On June 12, the Association of American Railroads reported that the companies’ rail traffic fell 8.5% in Week 23. The companies hauled 513,099 units during Week 23—compared to the 560,764 units in Week 23 of 2018.


https://marketrealist.com/2019/06/us-rail-traffic-volumes-fell-for-the-20th-straight-week/

Meet the new boss, he's the same as the old boss......wait a minute, He's much worse

VGR

  • Dispatcher
  • *****
  • Posts: 276
Re: Rail Traffic down 20 consecutive weeks
« Reply #1 on: June 19, 2019, 05:51:43 PM »
No surprise with all the tariffs

CSX_CO

  • Tycoon
  • ******
  • Posts: 8080
  • Ok...lets get our stories straight......
Re: Rail Traffic down 20 consecutive weeks
« Reply #2 on: June 19, 2019, 06:07:15 PM »
No surprise with all the tariffs

That, and with the railroads focusing on the more profitable traffic, not surprisingly car loading are down.


doublestacks

  • Mogul
  • *****
  • Posts: 2078
Re: Rail Traffic down 20 consecutive weeks
« Reply #3 on: June 19, 2019, 08:06:48 PM »
I hardly notice trains anymore when im near a mainline. Avon's receiving yard is empty most of the time with the exception of a couple tracks. Its like the traffic has been on a downward spiral since the end of 2016.
Steel is real and it feels no pain.

CSX_CO

  • Tycoon
  • ******
  • Posts: 8080
  • Ok...lets get our stories straight......
Re: Rail Traffic down 20 consecutive weeks
« Reply #4 on: June 19, 2019, 11:18:15 PM »
I hardly notice trains anymore when im near a mainline. Avon's receiving yard is empty most of the time with the exception of a couple tracks. Its like the traffic has been on a downward spiral since the end of 2016.

Hadn’t been quite as empty the last few weeks.

If everything is “moving” and yard is turning, should only be a couple tracks full in receiving yard.  When things big down, then it fills up.

Jeff Wagoner

  • Engineer
  • ***
  • Posts: 112
Re: Rail Traffic down 20 consecutive weeks
« Reply #5 on: June 20, 2019, 04:20:56 PM »
Osborn in Louisville has looked a little more empty as of late the few times I've been by.

BourdonBoy

  • President
  • *****
  • Posts: 1337
  • A conductor of both kinds.
Re: Rail Traffic down 20 consecutive weeks
« Reply #6 on: June 21, 2019, 11:08:13 AM »
Here is a somewhat related story released yesterday from Terre Haute.

Often stopped by trains? Feds want to know: Citing safety, economic impact, Railroad Administration seeks input
Dave Taylor, (Terre Haute) Tribune-Star
Thursday, June 20, 2019 12:35 PM

https://indianaeconomicdigest.com/Content/Most-Recent/Infrastructure/Article/Often-stopped-by-trains-Feds-want-to-know-Citing-safety-economic-impact-Railroad-Administration-seeks-input/31/67/96517/4860fafb-623b-4a1d-98a2-0c60803eb244?utm_medium=email&utm_source=enl&utm_campaign=0

IndyHog

  • Superintendent
  • *****
  • Posts: 1227
Re: Rail Traffic down 20 consecutive weeks
« Reply #7 on: June 21, 2019, 12:02:12 PM »
Freight rail giant Union Pacific Corp. says its volumes are declining this quarter amid poor weather and customer concern over trade uncertainty.
“We’re down about 4%,” tracking with declines across the broader industry, Union Pacific Chief Executive Lance Fritz said in an interview Wednesday.
Mr. Fritz said he views the economy as fundamentally healthy but that recent flooding in the Midwest and increased caution among industrial shippers are weighing on Union Pacific’s top line.


https://www.wsj.com/articles/union-pacific-says-uncertainty-harsh-weather-driving-down-rail-shipments-11560982743
Meet the new boss, he's the same as the old boss......wait a minute, He's much worse

ckpcpqq

  • Chief Dispatcher
  • *****
  • Posts: 667
Re: Rail Traffic down 20 consecutive weeks
« Reply #8 on: June 21, 2019, 12:11:02 PM »
Figures for the year 2019 aren't quite as dramatic.  For the first 24 weeks of 2019 both carload volume and intermodal traffic have declined 2.8%.  That's not good but for now at least it's not a reason to panic.  Part of the reason is bad weather, especially flooding in western states.

But things could get much worse if the tariff wars continue and especially if they escalate. 

I doubt if the move to PSR has had much of an impact.  The other reason--in addition to the tariffs and weather--for the decline is the economic slowdown not just in the US but in China and some of the EU nations too.  If this continues, we could be in for a recession in the not too distant future.  Declining transportation volumes are often a leading indicator of bad times to come.

Rick

  • Mogul
  • *****
  • Posts: 2831
  • Conrail #1
Rail Traffic down 20 consecutive weeks
« Reply #9 on: June 22, 2019, 10:43:18 PM »
Weather, psr, tariffs are the 3 main reasons and I’d say tariffs are having the least effect but still not helping.  On ns, cars are being much more fluid in movement.  Our yard isn’t down very much compared to last years numbers but the class yard and R yard are not near as full.  I know we have also had more cars than last year on multiple occasions.  Getting cars in and out much more efficiently plus utilization of road crews and yard crews building trains is helping a lot as well as not being understaffed.  Last year and in ‘17 ns was way understaffed in most of their major yards.  Also, talking with foreign crews, their version of psr has definitely improved their movements of cars


Sent from my iPhone using Tapatalk

IndyHog

  • Superintendent
  • *****
  • Posts: 1227
Re: Rail Traffic down 20 consecutive weeks
« Reply #10 on: June 28, 2019, 01:32:31 PM »
Employment at U.S. Class I railroads has fallen 4% since February 2017, the month before E. Hunter Harrison began implementing Precision Scheduled Railroading at CSX Transportation.
Harrison’s efficiency-driven operating model has since spread to Union Pacific, Norfolk Southern, and Kansas City Southern, making additional workforce reductions likely through the end of 2020.
Overall railroad employment tends to ebb and flow with traffic volumes. But now the Class I systems are moving more traffic with fewer people: U.S. rail traffic was 24% higher in May 2019 than it was in February 2017, according to Association of American Railroads data.
A review of railroad employment figures compiled by the U.S. Surface Transportation Board through May 2019 shows the impact of PSR.
CSX’s total employee headcount is down 18% since it adopted Precision Scheduled Railroading in March 2017. In contrast, overall employment at eastern rival Norfolk Southern is down 8% over the same period.
At CSX, the biggest hit was to executives, officials, and staff assistants, whose numbers fell by a third. Not far behind: A 29% reduction in professional and administrative staff. Some of those cutbacks, however, were launched by CEO Michael Ward just before Harrison arrived at the railroad’s headquarters in Jacksonville, Fla.
The number of maintenance-of-equipment workers at CSX fell 22% as the railroad reduced the number of its car and locomotive shops and scaled back operations at some of its remaining shops.
The number of train and engine crews at CSX fell 16% as the railroad operates fewer but longer trains.
The CSX maintenance-of-way headcount is down 11%.
Last fall, NS announced it would gradually adopt a PSR-based operating plan. Since September 2018, overall headcount at NS is down 5%.
The biggest drop since September has been an 11% decline in executives, officials, and staff assistants. The number of professional and administrative staff fell 7%.
Transportation department employment other than train and engine crews is down 9%, while the number of train crews has declined by 6%.
Maintenance-of-way and mechanical employment both have held relatively steady.
NS expects its headcount to drop by 3,000 positions, nearly all of it through attrition, by the end of 2020 as its locomotive fleet shrinks by 500 units and it, too, moves tonnage on fewer but longer trains beginning in July.
A loss of 3,000 positions would be a decline of 12% from current levels.
Union Pacific’s total headcount is down 7% since September, the month before it began shifting to an operating plan based on principles of Precision Scheduled Railroading.
The biggest reduction — a drop of 17% — has been to the mechanical forces that maintain freight cars and locomotives. UP has closed several car and locomotive shops and scaled back the operations of others across the system as it operates with fewer locomotives and freight cars. At the end of April, UP had more than 2,100 locomotives in storage.
The number of executives, staff, and assistants is down 11%, while professional and administrative staff has been reduced 12%.
UP’s train and engine crew headcount is down 3%, which is roughly in line with the decline in carloads so far this year.
Maintenance-of-way staffing is down 2%.
And what of BNSF Railway, the lone Class I railroad not adopting PSR?
BNSF’s employment levels have held relatively steady since UP shifted to Precision Scheduled Railroading.
BNSF had 43,335 employees in mid-May compared to 43,711 in mid-September.
The number of BNSF train crews has fallen 3%, roughly in line with the 4% drop in traffic volume this year.
Since February 2017, employment has risen on the U.S. operations of longtime PSR railroads Canadian National and Canadian Pacific. Employment on CN’s American subsidiaries is up 14%, while headcount on CP’s Soo Line subsidiary is up 6%.
Employment is up slightly on the smallest Class I railroad, Kansas City Southern, since 2017. KCS also is in the early stages of adopting an operating model based on the principles of Precision Scheduled Railroading.



Meet the new boss, he's the same as the old boss......wait a minute, He's much worse

nyc6001

  • Conductor
  • ****
  • Posts: 167
Re: Rail Traffic down 20 consecutive weeks
« Reply #11 on: July 01, 2019, 03:25:15 PM »
Because RRs are increasingly expensive and difficult to do business with. That's the main reason.

IndyHog

  • Superintendent
  • *****
  • Posts: 1227
Re: Rail Traffic down 20 consecutive weeks
« Reply #12 on: July 09, 2019, 05:35:56 PM »
my guess is this applies to NS & UP also



CSX Corp. (CSX) reports quarterly earnings on July 16th. Analysts expect revenue of $3.16 billion and EPS of $1.11. The revenue estimate implies 2% growth Y/Y. This could mark the fourth consecutive quarter that revenue was in the $3.0-3.1 billion range. Investors should focus on the following key items.
Rail Traffic Is Stagnant
Despite the efforts of policymakers to keep the economy afloat, rail traffic has stagnated. For the week ending June 1, 2019, rail traffic and intermodal units were down 6.1% versus the same week last year. Rail traffic could be impacted by a number of factors. Tariffs could be hampering international trade. The trade war with China could make businesses uncertain about the future, and the decline in industrial output could weigh.
Falling rail traffic implies the economy has likely peaked. In Q1 2019, CSX reported total revenue of $3.0 billion, up 5% Y/Y. However, revenue fell 4% sequentially.
 
Increases in both volume and price drove top line growth. Volume rose 4% Y/Y, while average selling price ("ASP") was up 5%. Revenue growth was broad-based with Construction-related products leading the way, up by double digits. Revenue from Coal and Agricultural products both rose by 7%. Low interest rates could keep housing elevated, which bodes well for Construction. If China tamps down purchases of U.S. agricultural products, then CSX's Agricultural segment could get hit hard in the second half of 2019.

The Industrial segment represents over 35% of total revenue and over 20% of CSX's total volume. U.S. industrial production perked up in May, but it could be tough sledding over the long haul if the economy falters. I expect headwinds for the company's Industrial segment going forward. This could be an interesting quarter for CSX. Investors could be disappointed by Q2 results or management's outlook for the second half of the year.
Margin Improvement May Have Run Its Course
In 2017, CSX's former CEO, Hunter Harrison, embarked on an aggressive cost-cutting program. At the time, the company's expense ratio had been in the 68-69% range. It has fallen steadily ever since. The expense ratio was 60% in Q1 2019, down 400 basis points versus the year-earlier period. An expense ratio below 60% is best in class and could put CSX in the same category as the Canadian railroads. The question remains, "Can it last?"
The efficiency gains have likely been realized already. It could be difficult for CSX to maintain such a low operating ratio if its revenue declines or stagnates. Q1 EBITDA of $1.5 billion was up 13% Y/Y. EBITDA margin was 51%, up 300 basis points versus the year-earlier period. It could be difficult to grow EBITDA from here until the company can generate more revenue growth. Any more cost takeouts could hurt employee morale or service levels. CSX trades at over 12x run rate EBITDA (Q1 EBITDA annualized), which is robust for a cyclical name at peak economy. Financial markets could melt up in the short term if the Fed cuts rates again; however, CSX's valuation appears untenable over the long term.
Conclusion
CSX is up 20% Y/Y. At over 12x EBITDA, the company is overvalued. Sell CSX stock.
Meet the new boss, he's the same as the old boss......wait a minute, He's much worse

Rick

  • Mogul
  • *****
  • Posts: 2831
  • Conrail #1
Re: Rail Traffic down 20 consecutive weeks
« Reply #13 on: July 09, 2019, 05:50:38 PM »
Some of my associates have already sold off their csx stock.  A few made out pretty well but definitely not what was expected.  A good friend of mine just met with his financial advisor who works for a well known investment company and he was told to sell off his railroad stock.  The word from the companies big investors is they are not purchasing any railroad stock for investment purposes at this time.  Not sure exactly what railroads or if all railroads.  The word is it’s too volatile right now in their opinion. 


Sent from my iPhone using Tapatalk

csxdispatcher

  • Dispatcher
  • *****
  • Posts: 300
Re: Rail Traffic down 20 consecutive weeks
« Reply #14 on: July 10, 2019, 11:00:39 AM »

CSX is up 20% Y/Y. At over 12x EBITDA, the company is overvalued. Sell CSX stock.

You left out the author's disclosure.

"I am/we are short CSX. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article."

He would benefit from the selling of the stock, and the reduction of the stock price.  With that knowledge, you have to take his "recommendation" with a large grain of stock.

IndyHog

  • Superintendent
  • *****
  • Posts: 1227
Re: Rail Traffic down 20 consecutive weeks
« Reply #15 on: July 10, 2019, 07:52:42 PM »
latest report
Meet the new boss, he's the same as the old boss......wait a minute, He's much worse

eppy1057

  • Brakeman
  • *
  • Posts: 29
  • I like Duct Tape
Re: Rail Traffic down 20 consecutive weeks
« Reply #16 on: July 12, 2019, 05:49:51 AM »
Come and spend a few minutes at the Porter Interlock. If anything the volume has increased here.

OrangeAndBlack

  • Brakeman
  • *
  • Posts: 38
Re: Rail Traffic down 20 consecutive weeks
« Reply #17 on: July 12, 2019, 12:58:09 PM »
latest report

Interesting. One thing the graph reveals, and that I suspected was hurting railroads, was the slump in car sales.

IndyHog

  • Superintendent
  • *****
  • Posts: 1227
Re: Rail Traffic down 20 consecutive weeks
« Reply #18 on: July 17, 2019, 11:12:01 AM »
CSX stock currently down 11%

NS down 6%
Meet the new boss, he's the same as the old boss......wait a minute, He's much worse

trainmaster53

  • Tycoon
  • ******
  • Posts: 7951
Re: Rail Traffic down 20 consecutive weeks
« Reply #19 on: July 18, 2019, 12:28:50 PM »
A friend of ours told us today that with the Rail Traffic Down, It could get worse, and We could be headed for Big Problems. And yes this Friend is a Good Source of Information about Stocks and other Issues.  Don't Believe Me, Come down to Bargersville on 144 at Morgantown Road and Go South on Morgantown Rd and Look on the Westside of the Road. This Man is a Business Man and Travels to Australia quite often. I will say This, You and Me could Not Afford the Houses that he is Build on his Property. $500,000 Dollars and Above