Commentary

TD Cowen’s 2024 Rail Preview

Written by Jason Seidl, Elliot Alper and Uday Khanapurkar, TD Cowen
“While rail bridge closures at Eagle Pass and El Paso affect approximately 45% of UP’s cross-border business, we expect the impact on overall volumes to be minimal due to quick resolution of activity,” TD Cowen analysts report. (Union Pacific Photograph)

“While rail bridge closures at Eagle Pass and El Paso affect approximately 45% of UP’s cross-border business, we expect the impact on overall volumes to be minimal due to quick resolution of activity,” TD Cowen analysts report. (Union Pacific Photograph)

We modestly lower our fourth-quarter 2023 estimates on mix pressures that are likely to be somewhat mitigated by fuel tailwinds. Intermodal recovery comes at the price of yield given the protracted over-the-road (OTR) rate trough. A revenue per carload rebound is likely a late-2024 story, at best. First-quarter 2024 should see typical seasonal softening, which is well understood as the focus shifts to recovery. We favor Union Pacific (UP) and Norfolk Southern (NS) in 2024 on margin recovery prospects.

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