UBS: Rail Transport Hit Hard By Harsh Winter

Unusually harsh winter weather wreaked havoc on the on-time performance of Canadian National Railway Co. (CNI)  in the second quarter, according to the UBS annual survey of short line railways.

Rick Patterson, UBS analyst and author of the survey said:

A consistently declining score at Canadian National has led to the first defeat of the 'scheduled railroad. However, we believe CN’s second-to-last-finish can at least be partially blamed on a particularly wicked winter in Canada.

The fourth annual survey of short line railroads had management from these important feeder railways rate the performance of their larger Class I partners for on-time performance, the availability of equipment, quality of sales and marketing, and the quality of their operations during the second quarter.

While Union Pacific Corp. (UNP) and CSX Corp. (CSX) improved year over year, Norfolk Southern Corp. (NSC) was crowned “King of the Short Lines” by UBS Tuesday. At the same time, Burlington Northern Santa Fe Corp. (BNI), CN, and its smaller domestic rival, Canadian Pacific Railway Ltd. (CP), all “took a step backwards” this year, Mr. Patterson said.

He added:

In our view, Union Pacific is the best long-term investment in the sector. On the downside, near-term valuation does not look very appealing.