GLG News by Iron Ore Mining Experts (North America)

Toby KolstadPresidentRail Theory Forecasts

Railcar builders to enjoy another great year

January 30, 2012

Analysis of:North American Fourth Quarter Rail Freight Car Orders | www.bloomberg.com

Railcar orders stayed relatively close to deliveries during the fourth quarter of 2011, and the backlog stayed above 64,000 cars. Although many of the backlogged orders are for delivery beyond 2012, most will be built this year, propelling builder deliveries well beyond the 47,000 rail cars manufactured in 2011.

Toby KolstadPresidentRail Theory Forecasts

Environmentalists and the EPA are likely to stop U.S. West Coast coal exports through 2012

January 19, 2012

Analysis of:Two coal companies want to export coal through the Port of St. Helens | www.oregonlive.com

Powder River Basin coal is currently being transported by railroad to Vancouver BC for export to China, but an export terminal on the Columbia River between Washington and Oregon could capture this traffic and allow for even more tonnage to be exported.  The Pacific Northwest is “greenie” territory, however, and environmentalists have been very successful to date in blocking the permitting of any new coal terminals in “their” region.

Toby KolstadPresidentRail Theory Forecasts

Railroad intermodal traffic predicted to continue growing

August 30, 2011

Analysis of:Big shippers see continued demand slowdown | www.dcvelocity.com

A recent survey of shippers indicated that a modal shift from trucking to railroad may be boosting railroad traffic more than lackluster economic and import growth would suggest. The recent surge in orders for new 53’ well cars from The Greenbrier Companies may continue if truck traffic continues to migrate to railroad.

Toby KolstadPresidentRail Theory Forecasts

Railroad profitability probably won't limit freight rate increases

August 24, 2011

Analysis of:Union Pacific crosses profitability threshold | www.ft.com

For the first time, Union Pacific Railroad earned more on its invested capital in 2010 than its total cost of capital, and the other major U.S. railroads most likely did the same. However, if the experience of the Norfolk Southern Railroad is any guide, freight rate increases are not likely to slow. That railroad has earned more than its cost of capital in almost every year since 2003 and yet its freight rate increases resembled other railroads.

Toby KolstadPresidentRail Theory Forecasts

Industrial Sand: New boom for rail traffic and railcar builders

August 19, 2011

Analysis of:Natural Gas Extraction Creates A Boom For Sand | www.npr.org

Industrial sand is used in the hydro-fracking method of oil and gas extraction from shale rock formations and demand is exploding as energy companies develop new wells. Demand for the small cube covered hoppers used to transport the material is also booming, taking up the slack from the decline in ethanol car production. Shipments of Industrial Sand could soon match those of Ethanol which are beginning to peak after climbing in a short time from almost nothing to about 2% of all railroad carloads.

Toby KolstadPresidentRail Theory Forecasts

Railroad domestic coal traffic forecasted to fall in 2012

August 12, 2011

Analysis of:EIA sees small decline in US coal consumption in 2012 | www.platts.com

The EIA has forecasted that coal use by domestic utilities will fall another 3% in 2012, which should have a similar impact railroad coal traffic numbers. Although coal exports increased this year to almost offset the decline in domestic coal use, they are not expected to increase significantly above the 100 million tons projected for 2011. Therefore the decline in domestic consumption is expected negatively impact railroad traffic in 2012.

Toby KolstadPresidentRail Theory Forecasts

As current economic indicator, railroad loads do not show retreat

August 11, 2011

Analysis of:North American Rail Freight Carloads for Aug. 6 | www.bloomberg.com

The carloads and intermodal shipments for the week ending August 6th remained strong, ahead of last year and continuing to grow at a steady, albeit slow rate during 2011.  The weekly totals for the past few years shows the fall in railroad traffic beginning in September of 2008, coincident with the financial crisis but fully 10 months after the supposedly official beginning of the recession in December 0f 2007. During the first ten months of 2008, railroad traffic marginally exceeded that of 2007.

Toby KolstadPresidentRail Theory Forecasts

Drop in gasoline prices will boost railroad intermodal shipments

August 9, 2011

Analysis of:Big gas prices drop on the way | content.usatoday.com

Gasoline prices have been around $4/gallon only two times in recent years: during the summer of 2008 before the financial crash in the fall of that year, and during the second quarter of 2011, before the fears of a double dip recession put the stock market into a free fall. In the first instance, retail sales improved when the price of gasoline plummeted and the economy began to mend. The same type of recovery is expected to develop in the fall if gasoline prices get close to $3/gallon.

Toby KolstadPresidentRail Theory Forecasts

Greenbrier will be running near capacity soon

August 5, 2011

Analysis of:Greenbrier Books Railcar Orders for $285 Million | www.joc.com

The fears that are gripping Wall Street have not been reflected in the reports of deliveries and new orders coming from the railcar builders. Business is booming and the backlogged orders are high enough to keep production increasing well into 2012. The Greenbrier Companies is battling Trinity Industries for the top spot in delivery totals and the recent orders may help it gain the lead if it can ramp up production fast enough before the end of the year.

Toby KolstadPresidentRail Theory Forecasts

Railroad traffic is not signaling a double dip

August 4, 2011

Analysis of:Railroad Rates Top Inflation on Pricing Power: Freight Markets | www.bloomberg.com

With the collapse of the stock market after the news of the European banking problems and the initial assessments of the US debt deal, it is comforting to see carload railroad volumes remaining steady and intermodal traffic following its seasonal climb towards the holiday season. The slow growth in rail traffic matched the small increase in the GDP during the first half and the numbers since May indicate a repeat performance in the second half.

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