“As we close out 2022, we will maintain strong price discipline while improving efficiency and service to capitalize on the available demand,” UP Chairman, President and CEO Lance Fritz said. (Photograph Courtesy of UP)

UP 3Q22: ‘Positive Strides’ Despite Challenging Year (UPDATED, Cowen)

Union Pacific (UP) “made positive strides in the third quarter to increase network fluidity and better meet customer demand,” UP Chairman, President and CEO Lance Fritz said during an Oct. 20 earnings report.

“Order expectations from shippers’ remain relatively in line from our second-quarter survey, but the level of certainty moderately declined in our recent survey,” Cowen analysts report. “It appears that gondolas saw demand improvement relative to second-quarter 2022. Boxcars declined relative to second-quarter 2022.”
Commentary

Cowen: 3Q22 Shipper Surveys Say …

According to Cowen and Company’s recently conducted third-quarter 2022 Rail Equipment and Rail Shipper surveys, the positive outlook for railcar orders remains relatively unchanged from the second quarter, and rail shipping pricing expectations have ticked down sequentially. Details follow, plus insights on the Class I railroads, ahead of earnings.

(Photograph Courtesy of CP)
Commentary

Cowen: ‘Looking Down the Windy Tracks’

A strike has been averted for now as the major unions reached tentative agreements. Contracts details are expected to be in line with the Presidential Emergency Board recommendations. The railroads will have to gradually pass through costs as contracts are renewed if they want to keep margins intact. This may prove difficult as we head into an economic slowdown. We continue to favor Canadian Pacific (CP) in the rail group.

Commentary

NEARS 2022 Conference: Day One Takeaways

At the NEARS (North East Association of Rail Shippers) Fall 2022 Conference, participants say they are still waiting to see consistency in rail service. Technical metrics are gradually improving, but in our view, fluidity will not show significant improvement until first-half 2023. On the first day of sessions (Sept. 21), many attendees expressed surprise that CSX reached outside the rail network for its new CEO. Also, Surface Transportation Board Chairman Martin Oberman foreshadowed a more proactive STB. Our key takeaways follow.

Cowen Global Transportation and Sustainability Conference: Key Takeaways

Peak season visibility is murky, as some cracks emerge in the macro. Improving rail service offers some respite as volumes tick upward. Rail pricing continues to come above cost pressures. M&A activity is solid. Preliminary capex for 2023 is looking at least flat.

(Photograph Courtesy of Wabtec)

Wabtec: ‘Strong’ 2Q22 Results, Backlog Grows

Wabtec Corp. delivered “strong” second-quarter 2022 financial results, with year-over-year growth in total sales (up 1.8%, carried by the Freight segment) and backlog (up 7.9%), despite “rising costs, continued supply chain challenges and significant unfavorable foreign currency exchange,” the company reported Aug. 5.

CN second-quarter revenues were up 21% from the prior-year period. This is “mainly due to higher applicable fuel surcharge rates, freight rate increases, higher Canadian export volumes of coal via west coast ports, higher volumes of U.S. grain, and the positive translation impact of a weaker Canadian dollar; partly offset by significantly lower export volumes of Canadian grain,” CN said. (Photograph Courtesy of CN)

CN: 2Q22 Reflects ‘Improved’ Op Performance, ‘Solid’ Top-Line Growth (UPDATED, Cowen)

“Our team has the network running well, demonstrating improvements in service levels to our customers, driving greater velocity and generating strong financial results,” CN President and CEO Tracy Robinson said during a second-quarter 2022 financial report. “We are preparing for a busy fall and are well positioned to achieve our 2022 outlook.”

CSX on July 20 reported that it would continue to increase its transportation headcount “to restore service and capture increasing rail volume” in 2022. It will also maintain its full-year capex target of some $2 billion. (Photograph Courtesy of CSX)

For 2022, CSX Targeting ‘Double-Digit’ Revenue, Operating Income Growth (UPDATED, Cowen)

“Though volatile commodity prices and persistent inflation have added uncertainty to the economy, our efforts remain focused on adding the resources needed to deliver improvements in our network performance, lift customer satisfaction and develop new rail service solutions to drive meaningful growth over the long term,” reported James M. Foote, President and CEO of CSX, during the Class I railroad’s July 20 release of second-quarter 2022 financials, which included net earnings and volumes that were flat with the previous-year period.

Commentary

Counting on Rail Congestion as a Rail Equipment Demand Driver is Not a Sustainable Long-Term Strategy

Our July 12 rail equipment expert call takeaways are consistent with J.B. Hunt Transport’s (JBHT) recent comments on about sub-optimal 2Q22 rail service (below). This solidifies our expectation of an eighth consecutive lease rate improvement for GATX, which reports on July 21. We continue to favor the shares into the print as detailed in our July 7 machinery and transportation OEM preview, “Revisions Into the Print.”

Greenbrier 3Q22: $3.6B Backlog, 97.5% Lease Utilization (UPDATED July 13, Cowen)

While The Greenbrier Companies posted “strong operating results” in the third fiscal-quarter ending May 31, 2022—with lease fleet utilization at 97.5%, deliveries at 5,200 units and a $3.6 billion backlog—the “performance was partially offset by inflation and the impact of the war in Ukraine,” President and CEO Lorie Tekorius said during a July 11 report.

LOAD MORE