GLG News by Mr. Toby Kolstad, President
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Freight Car deliveries and Orders exploded in fourth quarter
February 18, 2011
North American Fourth Quarter Rail Freight Car Orders | www.bloomberg.com
Rail car deliveries almost doubled from third quarter levels and orders advanced on the already healthy levels reported last October. Trinity Industries announced that their deliveries doubled and Greenbrier reported substantially higher deliveries from their previous respective quarters. Only FreightCar America and American Railcar have not reported fourth quarter activities, and they are expected to announce similar results.
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Rail traffic decrease due to weather
February 11, 2011
Intermodal Traffic Takes First Dip in a Year | www.ttnews.com
Almost coincidentally with a storm in early 2010, weather hampered rail operations during the week ending February 5th. Carload traffic just matched the same week last year and intermodal traffic was down 1.5%. Both because traffic will return to normal and because last year’s storm occurred during this week, carload and intermodal traffic are expected to post major gains for the week which will end Feb. 12th.
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Based backlogs, Greenbrier could be dominant railcar builder in 2011
February 4, 2011
Rail-car deliveries to reach 27,000 units in 2011, EPA says | www.progressiverailroading.com
The fourth quarter results from the railcar builder’s association had a big surprise: deliveries jumped from 3,706 in the third quarter to 7,333 cars in the fourth. One builder is expected to announce that their deliveries increased by 300%. The orders came in as expected, and The Greenbrier Companies, which has already reported their first quarter results, ended the year with what is expected to be the largest backlog of all the builders.
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“Modest gains” is too timid; Railroad carload traffic is “growing strongly”!
January 28, 2011
AAR: “Modest gains” in Week 3 traffic | www.railwayage.com
The AAR categorization of last week’s traffic gains as modest only looks at the absolute numbers: 1.5% carload growth compared to the same week last year. When the weekly gyrations in carload totals in past years and the severe weather that has plagued the nation since the start of this year are considered, any gains reflect a recovering economy and a strong railroad performance. Carload traffic is expected to grow 3% in 2011, which in normal times would reflect a booming economy.
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UP Railroad had the biggest intermodal gains in railroad industry during 2011
January 21, 2011
UP Expects More Intermodal From Truckers | www.joc.com
The Union Pacific posted a gain of approximately 20% for intermodal traffic in 2010, outpacing Norfolk Southern (+18%) and CSX (16%) in the East, but also bettering privately held BNSF in the West for which the AAR shows an increase of 10% in intermodal loads. Imported containers contributed most of the additional traffic, but the railroads also claim to be gaining domestic market share, and they are backing their claims with purchase orders for over 5,000 new domestic container cars in 2011.
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Early gains in Intermodal may be misleading, but traffic is definitely up
January 14, 2011
Intermodal Traffic Rises 8.6% for Week | www.ttnews.com
Compared to the same week last year, railroad intermodal traffic reported by the AAR jumped 8.6%. However, the holiday schedules were different and that could have affected traffic totals a little. A better measure of this year compared to last will not be available for a couple of weeks yet.
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Bring on the double dip! Gasoline to rise to $4.00 in 2011
January 3, 2011
Oil's surge in 2010 paves the way for $4 gasoline | finance.yahoo.com
Gasoline prices rose above $3.00 so rapidly in December that many are predicting that they will keep rising to over $4.00 per gallon. These same pundits say that isn’t that bad, since it represents only $750 per year per motorist. Phrased another way however, let’s say as a new energy tax of $1,200 per household, many would warn of an imminent recession.
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Bigger trucks would cost more than they would save
November 23, 2010
US Trucking Industry Pushes For Heavier Trucks On Roads | news.morningstar.com
By some convoluted reasoning, legislators are being asked to save wear and tear on local roads by letting bigger trucks use the Federal Interstate Highway system. The Obama Administration is even endorsing their reasoning. Who let the big rigs get loaded in the first place? Allowing them on the Interstate System will only shift the maintenance costs from the people who made that mistake to the rest of the country.
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Surplus railcars still abound, but not as much as the AAR reports
November 18, 2010
Railcar Owners Shrink Idled Car Fleet in October | www.joc.com
The AAR’s most recent tally of surplus railcars totaled over 318,000 units, or about 20% of the national fleet. However, rail traffic is down only 12% from its pre-recession highs. It is more likely that the car surplus is closer to 190,000. This is still a very high number and will depress demand for new cars and lease rates for many months to come, but it will eventually go away as opposed to the surplus numbers reported by the AAR.
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Greenbrier’s problems are common to all car builders, but…
November 11, 2010
Greenbrier Q4 loss wider than expected; sees loss in Q1 | www.reuters.com
Greenbrier’s projection that it did not see a turnaround in its near term future and that output and profits might not rebound until the second half of 2011 might be a common theme among all railcar builders. However, Greenbrier’s practice of backlogging “nonbinding” orders often distorts the outlook for the company and the “cancellation” of these orders can produce unnecessary surprises.
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Uncertainty is the problem for truckers and railroad intermodal managers
November 1, 2010
Has intermodal container business truly turned the corner? | www.progressiverailroading.com
The weekly intermodal traffic reports from the American Association of Railroads continue to encourage rail executives that the economy will continue to rebound and that traffic will continue to grow in the future, but no one knows for sure. Unfortunately, industry statistics are not available for the commodities moving by truck and railroad intermodal shipments, and gross traffic numbers leave everyone guessing as to what is behind the growth in traffic.
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Railcar builders are looking to better times
October 29, 2010
Freight car orders, backlog up sharply | www.railwayage.com
The RSI announced the third quarter results for the railcar builders and there were improvements in all categories. Orders totaled over 9,100 units and deliveries continued to increase from 2,946 in the second quarter to 3,706 in the third. Moreover, the backlog of unfilled orders increased from 14,930 to 19,267. If the trends continue, and there is no reason to believe they will not, industry output will almost double in 2011.
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Railroads are placing big bet on capturing domestic truck traffic
October 15, 2010
UPDATE 2-Greenbrier gets more railcar orders, shares jump | www.reuters.com
Greenbrier Corp. recently announced a number of sales and leases for intermodal container cars totaling around 5,000 wells. All of this equipment is for domestic container (53’ length) service, a traffic segment that saw some highway traffic defections to the railways during the recession. The railroads are betting that their new customers will not only stay with them but that more will follow as the economy improves and as the new eastern doublestack corridors improved railroad service levels.
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Reliable freight and High Speed Passenger Service can’t coexist!
September 21, 2010
High-Speed Rail Stalls | online.wsj.com
The railroads are caught in a bind. While seeking government handouts in Public-Private Partnerships and battling congressional reregulation legislation, they have been trying not to offend too many politicians by fighting the expansion of passenger service over their primarily freight network. It’s now crunch time and there are very few areas where the railroads can compromise: adding high speed passenger service would make track maintenance too expensive and freight service too unreliable.
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Rail traffic is up, but it’s no barn burner
September 8, 2010
Norfolk Southern, CSX Say Volumes Rise as Rail Demand Holds Up | www.bloomberg.com
Rail traffic is one of the best current measures of economic activity in the country, and the weekly carload reports from the AAR are one of the timeliest indicators available. Through the 34th week of the year, the numbers read as follows: total carload traffic is up 7.1% over the same period in 2009, and intermodal traffic is up 14.3%. Compared to the second quarter of this year, carload traffic in the third quarter is down 1% and intermodal loads are up 4.8%
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Railroad traffic shows economic pickup underway
August 27, 2010
Key Factory-Related Cargoes Rise at Top Railroads | www.joc.com
The weekly railroad traffic reports from the American Association of Railroads are one of the timeliest indicators of economic activity, and the numbers in recent weeks are pointing to a pickup in industrial activity. The weekly reports in the second quarter indicated a significant slowdown in economic growth long before the Federal Reserve lowered revised the GDP numbers for the period.
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Utilities begin to use more coal as railroad coal traffic increases
August 19, 2010
U.S. coal and natural gas generation rose, nuclear fell, in June | www.powergenworldwide.com
The EIA has reported that coal fired electric plants increased production faster in 2010 than overall demand for electricity has grown. Compared to June of 2009, coal fired generation was up 12.2% compared to an overall increase in demand for electric power of 7.9%. Power from plants that use Natural Gas also increased, as did power from Wind farms. Rail coal traffic has been steadily growing since the end of the first quarter and should finish the year about even to last year.
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Railroad intermodal loads may be peaking early
August 10, 2010
Retailer Container Imports May Have Peaked | www.joc.com
Weekly railroad intermodal traffic has recently approached the levels recorded in mid-2008 and was on track to reach pre-recession levels by the end of the year if the normal cyclical pattern for this traffic sector prevailed. That would not have matched the other economic data normally associated with these shipments and could have created a problem for retailers in early 2011. A new report by Port Tracker however, now claims that the traditional shipping patter may not be seen in 2010.
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Coal exports surge on Australian port problems and Asian steel boom
August 2, 2010
U.S. steam coal exports to support freight rates | www.commodities-now.com
Eastern coal exports rose to pre-recession levels during the first quarter due to the booming steel production in the Far East and the inability of Australian ports to handle the growth in demand for its coal resources. With collapse in demand from Canada, historically the biggest buyer of U.S. coal, Eastern railroads would have seen fewer coal shipments had not this market suddenly exploded and had not Australia failed to expand their port capacity.
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Rails are doing well, but so are truckers and air freight carriers.
July 23, 2010
Railroad group: Traffic still shows weak economy | www.businessweek.com
The number of rail car loads has been relatively steady for most of this year, up over last year but significantly lower than pre-recession levels. Intermodal traffic however, has not only recovered last year’s losses but is about to pass the weekly traffic levels of 2008. The latter however, are well below the traffic levels of 2006. Moreover, indices of truck traffic levels show similar gains, so the railroad's claim to be taking market share due to a more fuel efficient operation is questionable.
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