Full Steam Ahead: Freight Railroads Likely To Return To Service For The Holidays

Nov. 29, 2022 8:44 PM ETBRK.A, BRK.B, CNI, CNR:CA, CP, CP:CA, CSX, NSC, UNP7 Comments
Matthew Levy profile picture
Matthew Levy
199 Followers

Summary

  • There has been a threat of a freight railroad strike since early September.
  • Railroads offer a unique combination of fuel efficiency and capacity, and there is no perfect substitute (especially with the current truck driver shortage).
  • A strike could cripple segments of the U.S. economy, and it even has the potential to increase (national) inflation.
  • Despite both labor and cost (fuel) headwinds, railroads are uniquely positioned to benefit from a rise in fuel prices.
  • With Congress likely to mediate negotiations, a resolution -- and railroads returning to service during peak season -- is appearing more and more likely.

Railway tracks with Train Strike sign, transport disruption concept on a white background. 3D Illustration

steved_np3/iStock via Getty Images

Everyone seemed to expect that it was coming, and nearly every industry '[f]rom carmakers to refiners' were bracing for its impact according to the Associated Press. The AP explained in its Thursday, September 15th article,

Americans' approval of labor unions since 1936

Gallup

Freight Rail Carloads Originated by Week, Month

Average Weekly Rail Carloads Originated (US, Carloads + Intermodal) (Association of American Railroads)

Freight movement by mode of transportation, indexed to 100 in the year 2000

Indexed Freight Movement by Transportation Mode (FRED by the St. Louis Fed)

Freight movement by rail indexed to 100 in the year 2000

Indexed Freight Movement by Rail (FRED by the St. Louis Fed)

Cost per Person by mode of transportation in miles per gallon of fuel

List of Transportation Modes By Person-Miles Per Gallon (PMPG) (True Cost Blog)

Rail Network in USA of Union Pacific, BNSF, Canadian National, CSX, Norfolk Southern

The 5 Biggest North American (Freight) Railroad Companies (Sounding Maps)

Stock returns, YTD, UNP, CNI, CSX, NSC, BRK.A

YTD Selected Class I Railroad Stock Performance (Yahoo! Finance)

This article was written by

Matthew Levy profile picture
199 Followers
"In investing, what is comfortable is rarely profitable." - Robert Arnott I am a "Value" and "Growth" retail investor, looking for opportunities in emerging and undervalued stocks, often counter to conventional thought. I use fundamentals to back up my argument, and also like to highlight stocks which I believe to be overvalued. I have enjoyed nice gains from using my strategies, finding value in everything from Research in Motion, SuperValue, ZipCar, and ClearWire to Apple, Netflix, Tesla and Google (before they all jumped 60% - 2000% or more). I have been actively trading for more than a decade, focussing primarily on stocks. With the privilege of having lived in New York for many years, I have attended multiple shareholder meetings, conferences and sector exhibitions. Over time, I have found that I am particularly interested in innovation - across every sector. Being a small business owner, I enjoy seeing first hand how certain companies directly affect consumers, for better or worse, by doing my own research through channels such as assessing website and store traffic, eBay and other 3rd Party Website sell-through, and customer satisfaction/feedback. There are always good investments to be made, and I try to find them by looking for a combination of growth, unique opportunity, and value - to both shareholder, and arguably more importantly, to its own customers.

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