U.S. markets close in 5 hours

Freight industry takes hits during the pandemic, but the trains keep chugging along

Susanne Rust

The sounds of traffic and airplanes have quieted across much of Los Angeles County and California as health orders keep people indoors.

But if you listen closely, you’ll still hear the whistle of trains as they cart and transport food, consumer products, chemicals and livestock to and from manufacturers, stores and ports across the country.

At the Burlington Northern Santa Fe Railway, or BNSF, transit hub in La Mirada, Russ Abbott, a locomotive engineer, said that when the pandemic first hit, his only clue that life outside the railroad had changed was his quicker commute between home and work.

“It was really fast,” he said, describing the lack of traffic on the roads. “That was different.

“But here, nobody was sick, we kept moving cars and it all felt pretty normal,” he said to a curious visitor sitting in the cab of the 3,800-horsepower BNSF locomotive he was driving on the railroad tracks that parallel Stage Road in this eastern suburb of Los Angeles County.

Russ Abbott, a locomotive engineer, drives the 3800 horsepower BNSF locomotive at the transit hub for the Burlington Northern Santa Fe Railway in La Mirada, Calif.  (Carolyn Cole / Los Angeles Times)

Over the last two months, the COVID-19 pandemic and resulting lockdowns have disrupted supply chains nationwide and have hammered all sectors of the transportation industry. Freight-carrying railroads have also been hit, but not to the degree of airlines and auto manufacturers.

That's because railroads carry essential items during this pandemic, including frozen meat and vegetable oil, and chemicals such as chlorine bleach and sand for fracking. Abbott bears witness to this supply chain on his workdays, soaking in the clickety-clack of train wheels, carrying thousands of tons of supplies, as they roll over the joints and squats of the rail line.

In La Mirada, those tracks run on a northwest-to-southeast trajectory, behind a Home Depot, International Paper warehouse, and a U.S. Foods outlet. A small spur takes the railway west to an Amazon fulfillment center, a Frito-Lay warehouse and a Staples fulfillment center.

The railroad provides these companies with a direct connection to the coastal ports of Los Angeles and Long Beach, as well as the vast interior of the country.

And while Abbott enjoys moving the trains back and forth among the suppliers and distributors in the county, it's the Cajon Pass he relishes.

“I still get chills every time I go through it,” he said, describing the picturesque ride through the San Bernardino and San Gabriel mountains, which are now covered with bright poppies and wildflowers. “It never gets old.”

The Tehachapi loop is a three-quarter-mile spiral that connects the San Joaquin Valley to the Mojave Desert, gaining 77 feet in elevation.  (Carolyn Cole / Los Angeles Times)

And although Abbott’s day-to-day hasn’t changed drastically since the beginning of the year, there are differences, said Lena Kent, a spokeswoman for BNSF.

Employees now mostly enter information and data via iPads outside, so they don’t have to congregate in the office; trains are wiped down between shifts; and operators and other employees wear masks to prevent the spread of the coronavirus.

“But safety has always been a mainstay,” said Kent, who noted that train crews, who work with powerful moving machinery, are always generally small in number and spread out.

Russ Abbott climbs aboard his BNSF locomotive.  (Carolyn Cole / Los Angeles Times)

In addition, the volume being moved has shrunk, or in the words of Kent, "softened."

In La Mirada, the shrinkage is related to a drop in goods coming into the ports of Los Angeles and Long Beach, which have been hit by a combination of trade war disputes and the economic slowdown tied to the coronavirus.

On Thursday, Gene Seroka, the executive director of the Port of Los Angeles, announced at a news conference that movement is 80% of what it was this time last year.

Port statistics show container volume is down 15.5%, and officials predict business will remain “soft” for the next few months.

He noted steep declines in the fast-fashion business, automobiles, scrap metal and steel, with an uptick in produce coming from Latin America.

On the railroads, the movement of auto parts has dropped more than 90% compared with the same week last year.

"We've gone from uncertainty" as a result of the trade war "to radical uncertainty," said Mario Cordero, executive director of the Port of Long Beach. "I don’t think anyone can forecast where we’re going as a nation with our economy. ... I don’t see any normalcy for 2020, or for that matter for 2021. At least in terms of business normalcy."

Cordero also pointed to the blank sailing statistics, which are the cancellations of scheduled ships. He said in the first quarter of this year, there were 61 blank sailings to the ports of Long Beach and Los Angeles. Forty-eight are expected for this quarter.

Lena Kent, spokeswoman for Burlington Northern Santa Fe Railway at the BNSF transit hub.  (Carolyn Cole / Los Angeles Times)

"That's unprecedented," he said, and it translates to real money and jobs. Without a doubt, that reduction in traffic will affect all sectors of the supply chain, including trains, he said.

Then there's the drop in demand for coal, which is crippling the economy in the Midwest and mountain states.

Last week, more than 340 BNSF employees were laid off in Montana and Wyoming, where the demand for coal has plummeted. Several BNSF railroad facilities in Montana, Wyoming, Kansas, North Dakota, Wisconsin and Nebraska are now either permanently shuttered or temporarily reduced in size.

And other railroad companies, such as Union Pacific, are getting squeezed by decreased oil and coal demand, according to published reports.

While freight traffic has dropped around the nation, the workload has stayed "relatively steady" at the little hub in La Mirada, Kent said.

More than 340 BNSF employees were laid off this month in Montana and Wyoming, where the demand for coal has plummeted. While freight traffic has dropped around the country, the workload has stayed relatively steady at the hub in La Mirada.  (Carolyn Cole / Los Angeles Times)

Warren Buffett, whose Berkshire Hathaway owns BNSF, remains bullish about both the U.S. economy and the rail industry, which has a climate footprint just a fraction of that of trucking.

“Nothing can basically stop America,” Buffett said at Berkshire Hathaway's virtual shareholder meeting early this month. “The American miracle, the American magic has always prevailed and it will do so again.”

Times staff writer Susanne Rust and photographer Carolyn Cole are embarking on a road journey throughout California. They aim to give voice to those in remote parts of the state as they grapple with the worst health and economic calamity of our lifetimes.

  • Business
    Barrons.com

    Is the Stock Market Open Today? Here Are the Hours for Memorial Day 2020.

    After a brutal few months of the stock market's wild swings, Memorial Day 2020 is finally here. The Nasdaq Composite index has managed a year-to-date gain of 3.9%, with help from pandemic-resistant tech stocks. Memorial Day, when Americans honor those who died serving in the U.S. military, will be a little different this year.

  • Dow Jones Futures Jump On Memorial Day; Five Titans Near Buy Points In Coronavirus Stock Market Rally
    Business
    Investor's Business Daily

    Dow Jones Futures Jump On Memorial Day; Five Titans Near Buy Points In Coronavirus Stock Market Rally

    Dow Jones futures rose solidly Monday morning, along with S&P 500 futures and Nasdaq futures, with U.S. markets closed for Memorial Day. The coronavirus stock market rally powered ahead last week, with the Nasdaq composite nearing all-time highs. Apple, Microsoft, Google parent Alphabet, Tesla and Advanced Micro Devices are all near buy points.

  • Hulbert: My stock market forecast for June is likely wrong — but watch out for August
    Business
    MarketWatch

    Hulbert: My stock market forecast for June is likely wrong — but watch out for August

    For example, in that early-April column in which I suggested that the final bear market low could be June 14, based on the VIX, I presented another historical parallel that points to a final low on Aug. 7, based on the number of days between the end of the bear market's first precipitous drop and its eventual end. This other analysis was equally plausible and just as solidly based on historical data. The jury is still out on that forecast.

  • Business
    Bloomberg

    O.J., Accounting Fraud, Icahn: The Story of Hertz Going Bust

    Enterprise Holdings Inc. and Avis Budget Group Inc. are suffering through the same Covid-19 drought, but Hertz's own bad decisions and hard luck made it vulnerable at the worst time. No telling of Hertz's history is complete without mention of perhaps the most disastrous end to a major celebrity-endorsement deal of all time. Hertz was owned by Ford in the summer of 1994 when police pursued O.J. Simpson in a white Bronco SUV for the murder of his ex-wife, Nicole Brown Simpson, and her friend Ron Goldman.

  • 4 More Oil Stocks That Could Go Bankrupt in 2020
    Business
    Motley Fool

    4 More Oil Stocks That Could Go Bankrupt in 2020

    In the company's most recent quarterly report on May 18, management pretty much spelled out that it will struggle to meet the covenants it needs to preserve its credit facilities, and it has struggled to refinance much of its debt that will come due in 2021. In management's words: "There can be no assurances that the company will be able to successfully restructure its indebtedness, improve its financial position, or complete any strategic transaction." In addition, the company has said it has engaged consultants to look at financing alternatives.

  • Tilray's CEO Expects at Least a Dozen Cannabis Bankruptcies in 2020 -- Is He Right?
    Business
    Motley Fool

    Tilray's CEO Expects at Least a Dozen Cannabis Bankruptcies in 2020 -- Is He Right?

    Canadian cannabis company Tilray's (NASDAQ: TLRY) CEO believes that at least 12 marijuana companies will go under this year. In March, Tilray announced that it would be raising $90.4 million through an offering, largely because the company still could. CEO Brendan Kennedy told BNN Bloomberg that he "wasn't sure anyone was going to be able to raise any money in this industry again" and that "when we had the opportunity to strengthen the balance sheet, we did."

  • Airline Stocks Are Soaring: Should You Buy or Sell?
    Business
    Motley Fool

    Airline Stocks Are Soaring: Should You Buy or Sell?

    As a result, shares of major airlines like American Airlines (NASDAQ: AAL), Delta Air Lines (NYSE: DAL), Southwest Airlines (NYSE: LUV), and United Airlines (NASDAQ: UAL) have lost half to two-thirds of their value over the past three months. However, airline stocks bounced back in a big way this week, lifted by signs that travel demand is starting to recover. United Airlines shares led the way, surging 27.5%.

  • North Dakota Governor Breaks Down as He Calls Residents to Avoid ‘Mask Shaming’
    U.S.
    Meredith Videos

    North Dakota Governor Breaks Down as He Calls Residents to Avoid ‘Mask Shaming’

    The governor of North Dakota seemed on the verge of tears Friday, as he urged residents to be “empathetic” towards those who decide to wear face masks, noting that some people are far greater risk from COVID-19.

  • Is the stock market closed today? Here’s everything investors need to know about Memorial Day trading hours and closures
    Business
    MarketWatch

    Is the stock market closed today? Here’s everything investors need to know about Memorial Day trading hours and closures

    This year, however, the public-health crisis that has stricken the globe will offer an additional dimension to the act of service, sacrifice and patriotism in America. Coronavirus has claimed over 97,000 American lives and 45 million jobs, by one measure, and accelerated seismic shifts in the economy, hastening the bankruptcies of some major retail chains, including J.C. Penney Co. (JCPNQ) Pier 1 Imports Inc. PIRRQ)and Hertz Global Holdings Inc.

  • 7 “Perfect 10” Stocks to Buy Now
    Business
    TipRanks

    7 “Perfect 10” Stocks to Buy Now

    See the LLNW stock analysis. Krystal Biotech, Inc. KRYS) Using its STAR-D platform, Krystal Biotech develops and commercializes innovative therapies that target various dermatologic conditions.

  • Boeing Cuts 25% Of Its Workforce At Winnipeg Site; Top Analyst Slashes PT To $155
    Business
    SmarterAnalyst

    Boeing Cuts 25% Of Its Workforce At Winnipeg Site; Top Analyst Slashes PT To $155

    Boeing Co (BA) will lay off 400 employees at its aerospace manufacturing facility in Winnipeg as a result of the economic impact of the coronavirus pandemic. "Due to the impact of the COVID-19 pandemic, Boeing previously announced we would adjust the size of our company to reflect new market realities through a combination of voluntary layoffs, natural turnover and involuntary layoffs," Boeing spokeswoman Jessica Kowal said in a statement. Boeing Winnipeg, which employs 1,600 workers is one of the largest aerospace composite manufacturers in Canada.

  • Forget bonds — here are 5 safe tech stocks offering dividends and growth
    Business
    MarketWatch

    Forget bonds — here are 5 safe tech stocks offering dividends and growth

    Intel Dividend yield 2.2% Market cap: $250 billion Altman Z-Score: 3.8 Forward P/E: 13.0 March 2009 forward P/E: 24.0 Former Intel CEO Andy Grove famously observed that bad companies are destroyed by crisis, good companies survive them, and great companies are improved by them. He'd be happy to know that the company he helped build into a tech sector giant remains firmly in the latter category. When Grove was in charge, Intel (INTC) rode the PC wave, in the “Wintel” alliance with Microsoft (MSFT) .

  • 3 Travel and Tourism Stocks Poised for a Bull Run
    Business
    Motley Fool

    3 Travel and Tourism Stocks Poised for a Bull Run

    Travel and tourism are arguably the hardest-hit sectors of the economy during the coronavirus pandemic as governments around the world have instituted lockdowns and travel restrictions to slow the spread of the deadly infection. The first pick, Southwest Airlines (NYSE: LUV), is a bet on the resurgence of the U.S airline industry. While the other two, Carnival (NYSE: CCL) and Norwegian Cruise Line (NYSE: NCLH), are based on a rebound in cruise tourism. All three stocks are set to soar as the travel industry bounces back from the pandemic.

  • 3 Stocks to Buy and Hold for Decades
    U.S.
    Motley Fool

    3 Stocks to Buy and Hold for Decades

    Amazon's dominance should allow it to continue to grow over the long term, as more countries industrialize and more consumers switch to e-commerce. With the COVID-19 pandemic, the shift to online shopping has accelerated at an even faster pace. The company has even been hiring during the pandemic, with tens of thousands of openings even as jobs are being lost at a record pace in the U.S. Amazon has also committed to spending a whopping $4 billion on COVID-related expenses to stock up on personal protective equipment for its employees and conduct enhanced cleaning of its premises.

  • Business
    Oilprice.com

    Which Oil Major Is Best Prepared For The Future?

    European oil supermajors are slashing costs but sparing their renewable energy business. A recent Reuters analysis into European and U.S. supermajors' approach confirms what is becoming increasingly obvious: the Europeans are pushing strongly into renewables while the Americans are sticking with oil and gas. Of course, the European supermajors are subjected to more pressure to clean up their fossil fuel act than their American peers.

  • President Trump's Private Banking Information May Have Been Accidentally Shared During a Press Briefing
    Politics
    Meredith Videos

    President Trump's Private Banking Information May Have Been Accidentally Shared During a Press Briefing

    President Donald Trump's private banking information may have been accidentally shared during a press briefing

  • Stashing some gold? Here’s why that could soon be illegal, according to one notable hedge-fund bear
    Business
    MarketWatch

    Stashing some gold? Here’s why that could soon be illegal, according to one notable hedge-fund bear

    Odey said that when the economy recovers from the coronavirus pandemic, which he has likened to the Great Depression, central banks won't be able to contain inflation. “History is filled with examples where rulers have, in moments of crisis, resorted to debasing the coinage,” said Odey, who has raised his gold position in his flagship Odey European fund all the way up to 39.9% as of the beginning of the month from 15.9% at the end of March. Fear of government confiscation, as Bloomberg News explained, is often discussed among serious gold bugs — it happened in the U.S. in 1933 — but with major currencies no longer linked to gold, there are no signs such a move is realistically even being considered by central banks.

  • These 4 stocks are investment pros’ favorites — and not one is a ‘FAANG’ stock
    Business
    MarketWatch

    These 4 stocks are investment pros’ favorites — and not one is a ‘FAANG’ stock

    It takes guts to be a value investor these days. According to a recent analysis from Research Affiliates, value has lagged growth now for more than 13 years — the longest stretch in recorded U.S. market history. This has led to a seemingly-endless series of pronouncements in recent years that value investing is dead.

  • Home loan rates below 3% have arrived, helped by Powell and the Fed
    Business
    MoneyWise

    Home loan rates below 3% have arrived, helped by Powell and the Fed

    And while the surveys indicate average rates on conventional home loans are getting nearer and nearer to the 3% mark, a major mortgage wholesaler has rolled out a conventional 30-year mortgage with a rate as low as 2.5%. All of this has been going on amid alarm bells from Federal Reserve Chairman Jerome Powell and steps by the Fed itself to bolster an economy ravaged by the coronavirus. Why rates are going through the floor Fed chief Powell has made a series of speeches and appearances warning that the COVID-19 pandemic is beating up the U.S. economy like nothing the country has seen in a long time.

  • Results: NVIDIA Corporation Exceeded Expectations And The Consensus Has Updated Its Estimates
    Business
    Simply Wall St.

    Results: NVIDIA Corporation Exceeded Expectations And The Consensus Has Updated Its Estimates

    Taking into account the latest results, the current consensus from NVIDIA's 35 analysts is for revenues of US$14.5b in 2021, which would reflect a substantial 23% increase on its sales over the past 12 months. Per-share earnings are expected to rise 7.6% to US$5.84. In the lead-up to this report, the analysts had been modelling revenues of US$13.6b and earnings per share (EPS) of US$6.44 in 2021.

  • If You'd Invested $10,000 in Moderna's IPO, Here's How Much Money You'd Have Now
    Business
    Motley Fool

    If You'd Invested $10,000 in Moderna's IPO, Here's How Much Money You'd Have Now

    Buying Moderna (NASDAQ: MRNA) at its initial public offering (IPO) is a great example. While the overall stock market is still down year to date even after a solid rebound, shares of Moderna have skyrocketed close to 250% higher this so far year. Investors have flocked to the biotech stock because of the company's promising COVID-19 vaccine candidate.

  • Business
    Financial Times

    US shale industry braces for wave of bankruptcies

    The biggest independent shale oil groups in the US reported a record combined loss of $26bn in the first quarter as the sector braces itself for a wave of bankruptcies over the next two years. The collapse in crude demand brought about by the coronavirus pandemic forced more than $38bn in write-offs among top producers, according to analysis by Rystad Energy, sending net losses tumbling well below an average of $2.9bn in the past six years. The sweeping impairments reported by the 39 publicly listed US shale oil producers analysed by Rystad — which exclude majors and gas-focused companies — underline the pressure being faced by the industry as a result of the pandemic.

  • Prepare for the post-coronavirus-vaccine world by selling stocks that are hot today but will lose earnings momentum
    Business
    MarketWatch

    Prepare for the post-coronavirus-vaccine world by selling stocks that are hot today but will lose earnings momentum

    Now investors should look ahead to the post-vaccine world: Sell stocks that are hot today but will experience deteriorating earnings momentum after a vaccine comes out and buy quality stocks with good balance sheets that will experience positive earnings momentum in that new era. This chart compares the Dow Jones Industrial Average ETF (DIA) to seven stocks that I am using to illustrate shifts in money flows. • Zoom Video (ZM) has been one of the biggest beneficiaries of coronavirus.

  • Gilead’s Remdesivir Most ‘Beneficial’ In Covid-19 Patients Who Need Extra Oxygen, Study Shows
    Business
    SmarterAnalyst

    Gilead’s Remdesivir Most ‘Beneficial’ In Covid-19 Patients Who Need Extra Oxygen, Study Shows

    Gilead Sciences Inc.'s (GILD) remdesivir, its coronavirus drug candidate, is most “beneficial” for Covid-19 patients who require supplemental oxygen but don't need mechanical ventilation, according to a study by the National Institute of Allergy and Infectious Diseases (NIAID). "Ultimately, the findings support remdesivir as the standard therapy for patients hospitalized with Covid-19 and requiring supplemental oxygen therapy," the report said, citing preliminary results from the randomized, controlled trial, published in The New England Journal of Medicine. “These findings support the use of remdesivir in this population, with the largest benefit observed among individuals who required oxygen supplementation but were not mechanically ventilated,” said Merdad Parsey, Chief Medical Officer, at Gilead Sciences.

  • Bayer Reaches Deals on Big Share of 125,000 Roundup Weedkiller Suits
    Business
    Bloomberg

    Bayer Reaches Deals on Big Share of 125,000 Roundup Weedkiller Suits

    Bayer AG has reached verbal agreements to resolve a substantial portion of an estimated 125,000 U.S. cancer lawsuits over use of its Roundup weedkiller, according to people familiar with the negotiations. The deals, which have yet to be signed and cover an estimated 50,000 to 85,000 suits, are part of a $10 billion Bayer plan to end a costly legal battle the company inherited when it acquired Monsanto in 2018, the people said. While some lawyers are still holding out, payouts for settled cases will range from a few million dollars to a few thousand each, said the people, who asked not to be identified because they aren't authorized to speak publicly.