CSX Transportation, which kicks off the quarterly earnings reports on Oct. 16, is the only railroad expected to report a decline in earnings per share, according to a Trains review of consensus estimates from I/B/E/S.
Analysts expect CSX’s earnings per share to dip by nearly 3%. The railroad’s traffic volume slumped nearly 6% for the quarter that ended Sept. 30.
Earnings at Union Pacific are expected to rise nearly 8% even though it reported the biggest traffic decline, at minus 9% for the quarter, based on weekly Association of American Railroads carload reports.
UP, which reports earnings on Oct. 17, is in the midst of implementing Precision Scheduled Railroading through its Unified Plan 2020.
Earnings at Kansas City Southern, which reports its financial results on Oct. 18, are expected to climb 14%. Traffic was down 0.3% at KCS for the quarter, but it too is cutting costs and making efficiency strides as it adopts PSR.
Canadian National’s earnings are expected to climb 8.6% on flat traffic volume for the quarter. CN reports its financial results on Oct. 22.
Next up: Norfolk Southern, which is expected to report a 4% improvement in earnings per share on Oct. 23. Traffic on NS, which also is adopting PSR, declined 6% in the quarter.
Canadian Pacific — the only railroad to gain traffic in the quarter, with volume up 1.6% — also reports on Oct. 23. Its earnings per share are expected to grow by a little over 10%.
BNSF Railway, a unit of Berkshire Hathaway, is expected to report earnings alongside its parent company on Nov. 1. BNSF’s traffic dipped 2.9% in the quarter.
Unfortunately, I see an industry swirling around the drain! They cannot even hold onto core businesses anymore.
Paul Smith: Those are loads that vanished from CSX and NS over the past 20 years. CSX lost 23% of its merchandise traffic over that period; NS lost 15% or so of its merchandise volume. We can’t know what the margin of the lost traffic was. Almost certainly some of it was low-margin freight that required multiple handlings. But it’s just as sure that poor service drove off some traffic, as did economic changes that had nothing to do with railroads.
“Steve Smedley’s article states 16,132 trains of 75 cars each have vanished from the NS and CSX systems since the year 2000.”
That’s an average of approximately 2.3 trains per day and/or 173 carloads. Or is it cars? There is a difference between a loaded car and an empty.
What percentage of the system as a whole did the reduction of 2.3 trains a day or 173 carloads represent? This is a key question.
Another key question is the margin that was lost. Did the elimination of 1.2 carloads represent high value loads or marginal loads.
A successful business sheds unprofitable customers and in many instances marginally profitable customers if it can.
There will come a day when the the railroads will need every carload and shipper they can find. Thanks to PSR service degradations and their obsession with the sacrosanct operating ration, those former customers -big and small – who have turned to trucks may very well tell the railroads “Thanks, but no thanks.” I hope someone gets video of the RR execs marching out the door, pink slips in hand.
Should be interesting to see how many more quarters UP, NS and KCS can “squeeze blood from the turnip” before they either pro-actively opt to grow their businesses or face a similar decline in earnings to that of CSX.
Steve Smedley’s article states 16,132 trains of 75 cars each have vanished from the NS and CSX systems since the year 2000. Thats over 1.2 million lost carloads. The railroads are failing and becoming less revelent each year.