Author: Jason Seidl, Matt Elkott and Elliot Alper

Greenbrier: Order Activity Remains Healthy

We hosted virtual investor meetings and a group call with Justin Roberts, Greenbrier’s Vice President Corporate Finance and Treasurer. North American demand remains solid, and the production ramp-up appears set to occur without additional disruptions. In Europe, the Ukrainian conflict seems to have caused transitory headwinds, which, we believe, could create noise. We remain constructive but are slightly cautious in the near term.

Suds With Seidl: ‘Rail Service Severely Challenged’

We hosted another Suds with Seidl event featuring leaders across the railroad industry. Rail service continues to be severely challenged, although there have been some slight improvements in recent weeks. Rails continue to have tremendous pricing freedom, and are capitalizing despite service metrics. Intermodal demand remains high, although the recent Blume Global supply chain management platform cyberattack outage has impacted service.

Cowen Insight: 1Q22 Shipper Surveys Say …

Cowen and Company transportation analysts Jason Seidl (Managing Director and Railway Age Wall Street Contributing Editor), Matt Elkott and Elliott Alper recently conducted their first-quarter 2022 rail equipment and shipper surveys. Following are the results, plus insights on The Greenbrier Companies Inc. (GBX), Trinity Industries Inc. (TRN), GATX Corporation, and the Class I railroads, ahead of earnings.

Cowen Insight: 4Q21 Rail Shipper Survey Says …

Rail shippers expect price increases of 4.5% over the next 6-12 months, up 30 bps sequentially and above both our survey’s 3.4% five-year average and long-term 10-year average of 3.6%. The business outlook declined slightly sequentially, and economic confidence ticked up sequentially, while still below the survey’s average. Shippers appear to be largely supportive of reciprocal switching ahead of the pending Surface Transportation Board hearings. We see results as net neutral for the group, and continue to favor Canadian Pacific.

Infrastructure Bill: The Cowen Insight

Late Nov. 5, Congress passed the bi-partisan $1.2 trillion infrastructure bill, which President Biden is expected to sign soon. While not nearly enough went to traditional infrastructure needs, this was a clear win for the transportation space.

A Fight for Shareholder Approval

Canadian Pacific, CN and Kansas City Southern have been battling for votes in KCS’s upcoming shareholder vote on August 19 to approve or reject the CN transaction. CP has been actively telling investors to vote no, while KCS and CN have been pushing for approval. It remains uncertain if there will be a decision from the STB on a CN/KCS voting trust prior to the shareholder vote. We continue to believe that there is a 60% chance of approval for the voting trust, but remain wary of the political climate.

Cowen: Biden’s EO a ‘Laundry List’

We hosted our second call with a noted transportation attorney to discuss the Executive Order signed by President Biden on July 9. It appears to be much more measured than early reporting initially indicated. The tone surrounding the railroads implied recognized independence of the Surface Transportation Board, and is likely in line with the thinking of the Marty Oberman-led organization. Longer term, we will monitor bottleneck implications.

Cowen 2Q Shipper Surveys Say …

Cowen and Company transportation analysts Jason Seidl (Managing Director and Wall Street Contributing Editor), Matt Elkott and Elliott Alper recently conducted their second-quarter 2021 rail equipment and shipper surveys. Following are the results.