Fri, May 15, 12:47 PM
- Canadian National Railway (CNI +1.4%) is casting doubt on its outlook for growth in its energy-related shipments, with CFO Luc Jobin saying that meeting its 2015 forecast of 257K carloads will prove challenging unless energy-related shipments pick up in H2 of the year.
- Jobin says CNI is not altering its guidance for an increase in energy shipments of 40K carloads over last year’s 217K, but that the company will need to see rising volumes in Q3 and Q4 if it is to hit the target, which was lowered in April.
- CNI rival Canadian Pacific Railway (CP +1%) has said “for now” it is sticking to its energy products guidance.
Thu, May 14, 10:04 AM
- Railroad stocks are tilting lower after Kansas City Southern pulls its 2015 guidance at an investor conference.
- Investors are taking a cautious approach to Union Pacific (UNP -0.3%), Genesee & Wyoming (GWR -2.2%), Norfolk Southern (NSC -0.6%), CSX Corporation (CSX -0.1%), Canadian National Railway (CNI -0.5%), and Canadian Pacific (CP -0.3%) off the warning from Kansas Southern.
- Safety concerns also continue to linger in the sector which is seen as a development that could put some pressure on spending and investments.
- Previously: Kansas City Southern -3% after pulling guidance
Wed, May 13, 11:24 AM
- The U.S. oil industry is challenging new rules aimed at improving the safety of moving crude oil by rail, as the American Petroleum Institute petitions the U.S. Court of Appeals for the D.C. Circuit to block key provisions of rules unveiled earlier this month.
- The petition seeks to block a requirement that older tank cars be retrofitted with new safety features designed to prevent them from spilling oil or rupturing in a derailment, and challenges a requirement that tank cars be equipped with new electronic braking systems or face operational restrictions.
- Environmental groups say the new rules do not go far enough, and are considering their own legal challenge.
- Relevant tickers: CSX, NSC, UNP, CNI, CP, KSU, BRK.A, BRK.B, GBX, WAB, TRN, ARII, RAIL
Tue, May 5, 5:43 PM
- Norfolk Southern (NYSE:NSC) CEO Wick Moorman says the rail industry will challenge the U.S. government’s new crude-by-rail regulations, worried that the new rules could make shipping crude oil by train prohibitively expensive.
- The Department of Transportation last Friday called for the installation of new braking systems on trains hauling more than 70 cars of crude oil by 2021, a requirement Moorman says took the rail industry by surprise.
- The CEO tells WSJ that the new rules place railroads in a difficult spot because railroads do not own the vast majority of tank cars and thus have no control over whether the costly new brakes are installed; also, the brake requirement is not a mandate for tank car owners, only railroads, he says.
- Moorman says he is sure the industry will challenge the new rules either in court or petition the DoT for reconsideration.
- Relevant tickers: CSX, UNP, CNI, CP, KSU, BRK.A, BRK.B, GBX, WAB, TRN, ARII, RAIL
Fri, May 1, 2:36 PM
- U.S. regulators issue tough new rules for safer transportation of crude oil by trains, introducing a new tank car standard and mandating the use of new braking technology.
- The rules require that the oldest, least safe tank cars be replaced within three years with new cars that have thicker shells, higher safety shields and better fire protection; a later generation of tank cars, built since 2011 with more safety features, will have to be retrofitted or replaced by 2020.
- Regulators are not asking railroads to notify communities of any oil train traffic but will require a “point of contact” for information related to the routing of hazardous materials.
- Shares of tank car makers are higher: GBX +7.2%, WAB +7.4%, TRN +7.4%, ARII +7.2%, RAIL +5.7%.
- Other relevant tickers: CSX, NSC, UNP, CNI, CP, KSU, BRK.A, BRK.B
Mon, Apr. 27, 12:59 PM
- Declining output from shale oil fields has in turn cut demand for key types of railroad cars, according to new industry figures, in the latest sign of the fallout from lower crude oil prices.
- Buyers ordered 4,470 new railway tank cars during Q1, down 6% Y/Y and ~70% below the nearly 15K tank cars ordered during Q4, according to the Railway Supply Institute trade group.
- Q1 orders for covered “hopper” cars, used mostly to deliver fracking sand to drill sites, also fell to 131 cars from 11.5K a year ago and 8,627 cars during Q4.
- Tank car orders had surged with shale oil output, generally transported to refineries by rail, but output from North Dakota’s Bakken Shale field dropped in both January and February, and the U.S. Energy Department predicts continued declines in output there for April and May.
- Relevant tickers: TRN, ARII, GBX, WAB, CSX, NSC, UNP, CNI, CP, KSU, BRK.A, BRK.B
Fri, Apr. 24, 4:44 PM
- Canada issues an emergency directive aimed at slowing crude oil trains traveling through urban areas to a maximum of 40 mph and requiring increased inspections and risk assessments along key routes used for transporting dangerous goods.
- The directive is the latest in a series of steps by the Canadian government to boost rail safety in the wake of derailments as crude-by-rail shipments rise.
- Canada’s two biggest railroad operators - Canadian National (NYSE:CNI) and Canadian Pacific (NYSE:CP) - already have restricted train speeds to 35 mph in urban locations; in the U.S., rail operator BNSF (BRK.A, BRK.B) said last month it had begun slowing crude-carrying trains to 35 mph in cities with more than 100K residents.
Tue, Apr. 21, 6:49 PM
- Canadian Pacific Railway (NYSE:CP) fell 2.5% in today's trade despite recording the lowest operating ratio in the company's history - and lower is better in the key measure of efficiency - amid harsh winter weather and a two-day strike in February.
- CP's Q1 operating ratio fell nine percentage points to 63.2%, a number CEO Hunter Harrison called "staggering" and noted that the comparable figure for Q1 2011 before he took over CP's top job was 90.6%.
- It's not all smooth sailing, however: Harrison's biggest concerns this year are volumes of energy-related commodities, which have taken a hit from weak crude oil prices, and grain, which is unlikely to top last year's record harvest.
- CP says it still expects to ship 140K carloads of crude this year, despite rival Canadian National's (NYSE:CNI) reduced growth outlook for energy-related commodities to 40K carloads from its earlier view of 75K.
- Earlier: Canadian Pacific Railway beats by $0.07, revenue in-line
Tue, Apr. 21, 1:28 PM
- Canadian National Railway (CNI -4%) trades lower on heavy volume despite posting a record profit for Q1 as cost-cutting measures took hold.
- Revenue was up across transport category types with the exception of coal.
- Weak guidance across the railroad sector has created some selling pressure.
- Previously: Canadian National Railway beats by C$0.01, beats on revenue (April 20)
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Sun, Apr. 19, 5:35 PM
Fri, Apr. 17, 4:47 PM
- Trains carrying crude oil will be restricted to a 40 MPH speed limit in populated areas such as New York, one of the steps required by an order from the U.S. Department of Transportation in response to a series of derailments.
- The emergency order makes the agreement mandatory for all railroads hauling 20 or more tank cars linked together or 35 cars in total that are filled with oil or other flammable liquids, and applies to both older model DOT-111 tank cars and CPC-1232s the industry has been voluntarily building since 2011.
- The DoT also issued an advisory to railroads to use the latest technology to check for flaws in train wheels that can cause a crash; a broken train wheel is suspected of causing the March 5 derailment near Galena, Ill., of a BNSF Railway (BRK.A, BRK.B) train hauling 103 cars of Bakken crude.
- Other relevant tickers: CSX, UNP, NSC, KSU, GWR, CNI, CP
Thu, Apr. 16, 1:09 PM
- Canadian National Railway (CNI) says it will spend C$500M ($409.45M) in order to upgrade the safety of a feeder network in the western portion of Canada.
- A series of accidents has increased the focus on Canadian National's safety record.
- CEO Claude Mongeau also sees the spending as necessary to prep for the expected increase in volume on the feeder network.
- The company is sticking with its original forecast of C$2.6B ($2.13B)in capital spending for the year.
Tue, Apr. 14, 7:38 AM
- A detailed study from Cowen & Company on the railroad industry concludes this year will be one of the most difficult in years.
- Pricing pressure is at the heart of the firm's concerns.
- "Intermodal renewals have been occurring at considerably high rates, and the slight 10-bps decline in overall rail pricing in our survey suggests that non-intermodal pricing may be tempered enough to more than offset the intermodal rate strength," reads the report.
- Norfolk Southern (NYSE:NSC) warned on profit last night, while CSX (NYSE:CSX) reports Q1 earnings tomorrow.
- Railroad stocks: UNP, CNI, ARII, GBX, CP, KSU, WAB, TRN.
Mon, Apr. 6, 6:51 PM
- The exploding growth in oil train shipments fueled by the U.S. energy boom has sputtered in recent months, hurt by safety problems and low crude oil prices, WSJ reports.
- Railroads have been a major beneficiary of the U.S. energy boom, as some oil companies turned to trains to move crude to refineries from North Dakota and other areas underserved by pipelines, but WSJ says ~1.38M bbl/day of oil and fuels such as gasoline rode the rails in March vs. an average of 1.5M bbl/day in the same period a year ago.
- BNSF Railway (BRK.A, BRK.B), which is responsible for ~70% of U.S. oil train traffic, operated as many as 10 trains a day last year but now is averaging nine a day.
- Shipping oil across the U.S. by train can cost $6-$12/bbl, which makes sense only when the price of U.S. crude is significantly cheaper than oil pumped overseas; in recent weeks, the price gap between U.S. and Brent has narrowed to ~$7/bb, making some oil train shipments too costly at this time, but Barclays thinks U.S. crude may sell for $13/bbl less than Brent, which would boost oil train shipments later this year.
- Other relevant tickers: CSX, UNP, NSC, KSU, GWR, CNI, CP
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