Maybe there's an obscure index, similar to iShares Transportation Average (IYT), which forces all RR's to rise and fall in unison. Or perhaps a group of hedge funds that trades exclusively based on the insight which can be gleaned from newspaper headlines.
WSJ article, "A New Battle in Oil-Car Controversy", says Burlington Northern Santa Fe penalizing shippers for using DOT-111s tankers. Each railcar transports 700 bbls so cost per bbl is about $1.50. This is added on to the transportation cost of $10 per bbl. for oil-by-rail. Encourages shippers to employ newer tank cars.
Transcript of trial reveals the three jury findings:
Next looking to Page 1 of the verdict, Question 1: Do
you find from a preponderance of the evidence that Defendant,
Trinity Industries, Inc., knowingly made, used, or caused to be
made or used a false record or statement material to a false or
The answer is yes.
Question 2: Do you find from a preponderance of the
evidence that the Defendant, Trinity Highway Products, LLC,
knowingly made, used, or caused to be made or used a false
record or statement material to a false or fraudulent claim?
The answer is yes.
Turning to Question 3: What amount of money, if any,
do you find from a preponderance of the evidence to be the
damages that the United States Government has sustained because
of the acts of the Defendant or Defendants that you have found
to have violated the False Claims Act? Answer in dollars.
And the answer provided by the jury is $175 million.
I'll hand the completed verdict form to the courtroom
deputy to be maintained as a part of the record in this case.
Guardrails Said to Pass Safety Tests
Google search above link. NYT article reveals powerful U.S. Senator intervening in dispute, calling for investigation of FHWA..
2015 EPS estimate $2.58. Forward P/E ratio 19.7x at today's price $50.9/share. Buying here requires extremely long term time horizon.
Wall street loved Q4 earnings, and shares are soaring after hours. Can't explain why shares jumped 6.28% before earnings were announced. It seems to me that the share buyback was slightly less than I expected, and the effective tax rate was quite a bit better than anticipated. Cash is gone, and backlog has shrunk.
Q4 Revenue--$122.6 million vs. estimate=$101.9 million
Net income 53 cents vs estimate 40 cents in Q4
Eff Tax rate for 2014 was 32.5% vs 36.5% in 2013
Cash +cash equivalents=$8.9 mn vs $55.1 mn in 2013
Backordered units=651,400 vs 1,520,800
Shares outstanding reduced from 19.3 million to 18.7 million, or about 3.2% due to buyback
Distributor inventory 326,700--company inventory 104,200
Can anybody predict 2015 earnings?
Railway Age article says the diluent added to bitumen (to make it less viscous) lowers the flash point of the mixture, making it highly explosive--e.g.CN derailment and explosion in Ontario at subzero temperatures. CSX derailment and fireballs stemmed from transport of Bakken crude oil.
Savannah, Georgia, is the fastest growing port in the U.S. The Harbor Authority is dredging the harbor to accommodate larger vessels. Freight volumes surging, even before West Coast strike.
Above title links to Bloomberg story about Port of Savannah. Ships arrive from Europe, India, SE Asia, and Middle East. Railroads serving Savannah include Genesee and Wyoming, CSX, and Norfolk Southern.
From Journal of Commerce
ongelluzzo, Senior Editor | Feb 20, 2015 9:52PM EST
Negotiators for the International Longshore and Warehouse Union and the Pacific Maritime Association have reached a tentative coastwide contract agreement for five years after more than nine months of bargaining.
ILWU President Robert McEllrath and PMA President James McKenna said they were pleased to reach the tentative contract agreement. “We are also pleased that our ports can now resume full operations,” they said in a joint release.
The membership of both groups must now vote to ratify the contract, a process that could take several weeks. The details of the agreement were not immediately available.
The deal was also praised by Long Beach Mayor Robert Garcia. He thanked President Obama and Labor Secretary Thomas Perez for helping to push the agreement forward in a difficult negotiating environment.
The National Retail Federation said the efforts of management and labor must now be to clear the backlog of containers and vessels at West Coast ports.
CSX at Barclays Industrial Select Conference 2/18/2015
Fredrik Eliasson CFO
Expect double digit earnings growth. Target mid-sixties operating ratio. Loss of coal business is a major headwind. .
Difficult weather in NE United States-snowstorm. 400 Employees couldn’t get to work yesterday. Easy comparisons with Q1 2014 . Volume shows “good vibrancy”. Crude- by- rail will still grow but less than we anticipated. Domestic coal—low nat gas prices and mild winter weather reduced coal demand, maybe down 5% year-on-year. Chicago is very fluid this year, less weather disruption, better coordination among railroads.
Western and Canadian vs. Eastern railroads:
Western railroads have higher, about 4.5x-6x EV/revenue, because they can achieve low sixties operating ratio. We have lost nearly $900 million coal revenue since 2011, a very abrupt dislocation, which impairs our operating ratio. We don’t have the length of haul vs. the Western RR’s. We are short haul RR’s--- can only run 600 miles vs. Western railroads 1100 miles—most of the costs are at the nodes, not the links. We have an advantage of population density, and the opportunity of an untapped [East Coast] intermodal.market which other railroads do not have.
Profitability of intermodal vs. coal-
Chemicals and coal are highly profitable. Intermodal margins are attractive because load travels in both directions. Profitability in intermodal now on par.
Intermodal truckload opportunity
Opportunity in service and reliability—reliability speed. Created a hub and spoke network in NW Ohio for intermodal. We have significant capacity—little incremental cost to grow intermodal.
Only one supplier in the locomotive market right now. We purchased 200 locomotives and rebuilt 150 locomotives. These will increase our velocity.
Capex estimated 16-17% of revenue. 80% of capex goes to maintenance rails and cars, 20% goes to growth.
Use of excess cash flow? Reinvest capital in growth,hig dividends, share repurchase
Barclays Industrial Select Conference 2/19/2015
Rob Knight , CFO:
Freight volumes YTD are flat to +1% vs. year ago levels. West Coast port shutdown has $5 million revenue impact per day. Most of that freight cannot be diverted to East Coast, so revenue is deferred, not lost. Coal volumes are down—utilities have a 4-5 day diminished inventory versus year ago levels. Powder River is our main coal basin. We have furloughed crews, and placed locomotives in storage.
Shale only 4% of total volumes—2.5% sand, and 1.5% crude oil. Rig counts and volumes coming down.
Unlimited opportunity to attract intermodal away fro m trucking. Good opportunities for freight growth at border with Mexico—we are the only RR that meets all six rail crossing points. Autos and intermodal opportunity. Grains are another cross border growth opportunity. Chemicals strong in the Gulf, construction in Texas strong.
Capex spending target 17% of revenue. Return on invested capital is 16% using book value, but only 8% using replacement cost.
Uses of excess cash flow:
Dividends and share repurchases.
If I were an engineer and needed to transport 100 cars of coal from Powder River Basin to Chicago, and had two engines, I would perhaps make two trains of 50 cars for the journey, instead of one long train. It seems to me that long trains would be slow to accelerate and decelerate, and more likely to fracture the couplings attaching the first car to the engine. Long trains would be unstable on declines, prone to buckling, unless cars could be braked individually. Also more likely to generate harmonic vibrations on the rails. However, I have read that long trains have greater velocity, which seems counterintuitive.
CSX Corporation Shouldn't Trade At A 25% Discount To Peer Averages
Seeking Alpha article linked above has interesting "comments" about recent derailment event.
Railway Age article says main problem is transporting "hot oil" containing explosive gas, Says shippers remove the gas in Texas before transporting, but not in South Dakota.
Oil train mishaps reveal tank car strengths and limitations
Written by David Thomas, Contributing Editor
Two same-day derailments of crude oil trains in Canada and a third in West Virginia two days later illustrate the strengths and limitations of the newest general-purpose tank cars plying North American rails.
CN’s seven-car blaze late Saturday, Feb. 14, 2015 in a roadless area of northern Ontario, where 29 cars of a 100-car train derailed, involved CPC-1232 cars, CN confirmed to Railway Age. But a smaller event in the early hours of the same day in southern Alberta was an encouraging real-world trial of the industry's voluntary CPC-1232 tank car design, in production since 2011.
CP Derailment Sometime before dawn, a westbound Canadian Pacific train carrying crude from Western Canada jumped the tracks in the midst of a rocky debris field created in 1903 when Turtle Mountain collapsed, flooding the Crowsnest River valley with a vast flow of limestone boulders and killing 90 people. In Saturday’s incident, 12 CPC-1232 tank cars derailed, two of them toppling into the debris field and coming to rest on their sides (top two photos, by David Thomas). No crude leaked from the two tank cars, which were jacked upright and emptied of their lading into three rescue tankers dispatched from Lethbridge, along with several hopper loads of ballast to repair the track. On-site supervisors said a broken rail was responsible.
The CPC-1232 car is designed to contain its lading in relatively slow-speed derailments and rollovers. As the Crowsnest Pass event indicates, they work as designed in low-energy......
Shouldn't CSX and NSC benefit from the West Coast congestion?
From Drewry's Container News:
"Along the main USEC [US East Coast] artery of the trade, November’s 14.6% year-on-year uplift in traffic from Asia was matched by a similar percentage gain in December. For the whole of 2014, Asian exports entering all US gateways increased by 6.3% to 13.9 million teu with East Coast volumes up 10.5% compared to a 4.8% rise in West Coast flows. The much smaller US Gulf Coast market saw an advance of 7.8%.
During the fourth quarter, the gap between EC [East Coast] and WC [West Coast] growth widened appreciably with imports landed on the US western seaboard posting an uplift of only 3.6% while EC loads rose by 13.4%. If one works on the premise that under normal circumstances cargo growth rates should be broadly similar across the US eastern and western seaboards then it would appear that as much as some 150,000 teu could have been diverted to the USEC during 2014.