Yesterday, 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
Wed, Apr. 29, 8:08 AM
- Norfolk Southern (NYSE:NSC) reports general merchandise revenue fell 2% to $1.5B in Q1.
- Intermodal revenue was down 1% to $592M despite higher volume.
- As expected, coal revenue fell off 16% Y/Y.
- Lower fuel surcharges were a factor during the quarter.
- The company's operating ratio rose 140 bps to 76.4%.
- Previously: Norfolk Southern EPS in-line, misses on revenue
Wed, Apr. 29, 8:04 AM
Tue, Apr. 28, 5:30 PM
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Tue, Apr. 28, 2:48 PM
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
Wed, Apr. 22, 3:25 PM
- Maybe not a surprise to Norfolk Southern (NSC +2.5%) - which didn't bother to list the case in a recent quarterly report - Power REIT (PW -38.7%) has lost its lawsuit against the railroad operator, with a court declaring NSC not in default of a lease, and not otherwise interfering with PW's use of the disputed property.
- Background: Power REIT Lawsuit: Nearing A (Disappointing) Finish
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
Tue, Apr. 14, 9:12 AM
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. 13, 5:39 PM
Mon, Apr. 13, 5:02 PM
- Q1 EPS is expected to be $1.00, 15% lower than a year ago, on revenues of $2.6B down 5%.
- Coal shipments continue to experience downward pressure thanks to a big decline in export volume.
- On a good note, lowered fuel costs will have expenses down 3% to $2B.
- Volumes are expected to rebound in Q2 along with the better weather, but coal will continue to stay under pressure.
- A conference call is set for tomorrow at 8:45 ET. There will be no Q&A.
- Source: Press Release
- NSC -3.9% after hours.
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
Tue, Mar. 31, 2:16 PM
- MKM Partners thinks the smart move is to sell railroad stocks and buy airlines.
- Chief Market Technician Jonathan Krinsky leans on technical analysis (video) in making the transportation call.
- Avondale Partners is also out with a bearish take on railroads.
- The investment firm lowers Canadian Pacific (NYSE:CP), Norfolk Southern (NYSE:NSC), CSX (NYSE:CSX), Canadian National Railway (NYSE:CNI), and Union Pacific (NYSE:UNP) to Market Underperform on earnings growth concerns.
Thu, Mar. 26, 12:41 PM
- U.S. rail stocks are under pressure, led by Genesee & Wyoming (GWR -1.9%) after cutting Q1 revenue guidance to $375M, $25M less than guidance provided Feb. 10 and below analyst consensus of $418M.
- GWR says Q1 traffic has been weaker than its expectations due to severe winter weather in four of its North American regions, as well as weakness in certain commodity groups, including steam coal and metals.
- GWR's stock price target is cut to $108 from $113 at Credit Suisse, citing February carload data that points to a decline in both thermal coal and metals.
- Also, Union Pacific (UNP -2.1%) was downgraded earlier by Cowen as the firm adjusts UNP's growth expectations, and Norfolk Southern (NSC -0.2%) was downgraded by Raymond James.
NSC vs. ETF Alternatives
Norfolk Southern Corp is engaged in the rail transportation of raw materials, intermediate products, & finished goods in the Southeast, East, and Midwest and, via interchange with rail carriers, to and from the rest of the United States.
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