Canadian Pacific 7012 is one of the carrier’s newly painted SD70ACUs in the retro “beaver script scheme from the 1950s. It is shown in the top photograph in Berea leading Q166. which is a Canadian Pacific run through train on CSX between Chicago and Buffalo, New York. Last week I caught it in Willoughby as shown in the bottom photograph
Norfolk Southern said this week that during the fourth quarter of 2019 its net income fell 5 percent to $666 million, or $2.55 per diluted share, compared with net income of $702 million, or $2.57 per share in the fourth quarter of 2019.
Operating revenue dropped by 7 percent to $2.7 billion as a result of a 9 percent decrease in total volume.
In a news release, NS said operating expenses were $1.7 billion, which was down $90 million compared with the same period of 2018.
Lower compensation and benefits, fuel costs, equipment rents and materials usage were partially offset by lower gains on operating property sales and increased purchased services expense.
Income from railway operations was $1 billion, down $116 million year over year.
NS posted an operating ratio of 64.2 percent for the quarter and 64.7 percent for the full year, both of them records.
For calendar year 2019, NS reported net income of $2.72 billion, or $10.25 per share, compared with $2.67 billion, or $9.51 per share, a year earlier.
On a year to year comparison between 2018 and 2019, NS said its railway operating revenue fell 1 percent to $11.3 billion on a 5 percent decrease in overall volume. Carloads declined in all major commodity categories.
NS reduced operating expenses by 3 percent to $7.3 billion. Income from railway operations rose 1 percent to a record $4 billion.
“Norfolk Southern’s strong financial performance in a year of macroeconomic headwinds is underpinned by the hard work of our team to expeditiously implement productivity initiatives throughout the year,” NS CEO James Squires said in a statement.
During the fourth quarter of 2019 NS saw its coal traffic fall by 21 percent.
Company officials attributed that to low natural gas prices putting pressure on coal for use in electricity generation, and reduced steel production and a weakening market for export coal.
Squires said the annual operating ratio improvement was “particularly impressive against the backdrop of declining volumes.”
NS Chief Operating Officer Mike Wheeler said the carrier set records last year for on-time performance records for merchandise and automotive traffic and posted its best intermodal on-time performance since 2009.
“Our network is running fast and on time,” Wheeler said, citing a 17 percent improvement in average train speed and a record low terminal dwell that was 30 percent below the levels of 2018. He said crew starts were down 15 percent.
During 2019 NS cut its locomotive fleet size by 20 percent and ended 600 mechanical positions.
It expects to eliminated another 135 positions this year.
NS’s merchandise volume dropped 6 percent in the fourth quarter due to a slowdown in the industrial economy. Intermodal volume was off 8 percent.
Chief Marketing Officer Alan Shaw says coal traffic is expected to continue lagging this year but intermodal volumes should resume growth in the second half of the year.
He said uncertainty in the industrial economy means the outlook for merchandise traffic is cloudy.
Squires said NS expects flat revenue this year but should shave 2.35 points off its operating ratio as it continues to cut costs. The carrier is targeting a 60 percent operating ratio by 2021.
Shaw said the fourth quarter of 2019 was the 12 consecutive period in which NS has enjoyed growth in revenue per unit for all three of its business segments.
Canadian National said this week that a labor strike and weak freight business contributed to a decline in revenue in the fourth quarter of 2019.
In a news release, CN said revenue declined 6 percent to CA$3.6 billion; diluted earnings per share (EPS) fell 22 percent to CA$1.22, adjusted diluted EPS dropped 16 percent to CA$1.25; and operating income and adjusted operating income each tumbled 16 percent to CA1.2 billion and CA$1.25 billion, respectively.
All figures are in comparison to the fourth quarter of 2018.
CN posted an operating ratio of 66 percent, up 4.1 points, and an adjusted operating ratio of 65.2 percent, up 4 points.
For the 2019 calendar year, CN had revenue of CA$14.9 billion, up 4 percent; a diluted EPS of CA$5.83, down 1 percent; an adjusted EPS of CA$5.80, up 5 percent; operating income of CA$5.6 billion, up 2 percent; and an adjusted operating income of CA$5.7 billion, up 3 percent.
The 2019 operating ratio was 62.5 percent, up 0.9 points; and an adjusted OR of 61.7 percent, up 0.2 points.
Traffic volume in the fourth quarter dropped 7 percent on a carload basis, or 13 percent when measured by revenue ton miles. Every commodity category fell during the quarter.
For the year CN’s traffic volume fell 1 percent on a carload basis or 3 percent on a revenue ton mile basis.
“We remain focused on executing our strategy of long-term sustainable growth at low incremental cost,” said CN President and Chief Executive Officer J.J. Ruest in a statement.
“”Our strategic deployment of technology, the next step in our precision scheduled railroading model and our next driver of value, is well underway. At the same time, we continue to closely monitor the freight volume environment and rightsize our resources and costs to demand.”
CNS said that during the past years it has spent CA$7.4 billion in capital expenditures to increase network capacity, efficiency and resiliency
Ruest said the 2020 capital spending budget will rise to CA$3 billion.
Although CN sees growth opportunities in 2020, it expects low single-digit volume growth in terms of revenue ton miles.
“The first half will be a challenge,” Ruest said.
CN is targeting an EPS growth in the mid single-digit range this year compared to adjusted diluted EPS of CA$5.80 in 2019.
Ruest said CN will look to additional small acquisitions and partnerships as a way to boost freight volume.
“We’re very mindful for the rail industry to be successful, including at CN, we need to grow the pie,” he said. “Just exchanging pieces of pie, that’s not a long-term solution.”
In the long run Ruest said CN needs to do a better job of competing with trucks.
CN has discarded 5,000 freight cars, returned all leased locomotives, vacated some office space in Montreal, and eliminated 1,300 positions.
Norfolk Southern said this week that during 2019 it worked with 77 businesses that opened new or expanded facilities.
NS said those businesses were located in 16 states and invested nearly $2 billion to develop 54 new and 23 expanded rail-served commercial projects
In a news release the carrier said those investments are expected to generate more than 62,300 carloads of new rail traffic annually.
The businesses included a fertilizer facility in North Carolina; a butane export plant in Virginia; a tissue manufacturing plant in Georgia; an asphalt facility in Alabama; and an auto frame warehouse in Maumee, Ohio.
NS said it works with customers and state and local economic development leaders to identify suitable rail-served sites and develop infrastructure that connects industrial development projects to its rail network.
In the past decade NS said it has participated in locating or expanding 974 industrial facilities that represent private investment of nearly $62 billion.
At the end of 2019 positive train control was in operation on 98.5 percent of the required Class I railroad route miles the Association of American Railroads said this week.
PTC is in operation across 53,001 miles of 53,676 miles of PTC-required track.
In a news release, AAR said the Class 1 carriers are posed to meet the federally mandated deadline of Dec. 31, 2020, for full PTC implementation, with several railroads already operating it across their entire required PTC footprint.
AAR said the remaining Class 1 carriers continue to test their PTC systems to ensure they are fully interoperable and work seamlessly across operations.
Class 1 railroads have spent $11.47 billion on PTC development, installation and implementation.
This has included the installation of wayside, back office and locomotive hardware.
AAR said all carriers have all spectrum in place and had completed all necessary employee training as of the end of 2018.
The Rail Safety Improvement Act of 2008 requires railroads to implement PTC to prevent four major types of train accidents: Train-to-train collisions; derailments caused by excessive speed; unauthorized incursions by trains into sections of track where maintenance activity is taking place; and movement of a train through a track switch left in the wrong position.
The Posner Foundation of Pittsburgh has given Operation Lifesaver another grant of an undisclosed amount.
The foundation has granted OLI $100,000 in 2019 but a news release did not indicated the size of the 2020 grant.
The money is to be used to continue and expand the support of rail safety projects and initiatives funded in part by the foundation last year.
The latest grant will support the expanded distribution of a public service announcement campaign seeking to reduce near-miss incidents with pedestrians near railroad tracks; supplement funding for state programs; and create a new discretionary fund to assist state programs with purchasing educational and promotional materials for their outreach efforts.
The Sugarcreek-Baltic steam train that used to operate on the Ohio Central was commonly pulled by 4-6-0 No. 1551, but not always.
In the top photo it is July 4, 1996, and the motive power is 2-8-0 No. 13, which was built in 1920 by Alco-Brooks.
The locomotive had various owners over the years including the Buffalo Creek & Gauley.
In the bottom photo, No. 13 is shown in Sugar Creek.
Two EMD switchers that once worked on the Grand River Railway are up for sale by the Age of Steam Roundhouse Museum.
The EMD SW1200 switchers are being sold in an auction for which bidding ends on April 1.
The reserve price is $90,000 per unit.
The museum, which was founded by the late Jerry J. Jacobson, said it will use the proceeds from the sale to fund its restoration work on its collection, which primarily is steam locomotives.
Nos. 1202 and 1205 are stored serviceable at the roundhouse in Sugar Creek.
Before coming to AOS, they were used by a Pennsylvania short-line railroad, the Aliquippa & Southern. A&S was part of the Ohio Central System that Jacobson once owned.
The units were leased by AOS to the Grand River where they wore a Baltimore & Ohio inspired livery.
AOS said in announcing the auction that it will continue to own diesel locomotives, including eight Alcos, two Fairbanks-Morse switchers, a General Electric 25-ton switcher, and 11 EMDs.
No. 1202 was built by EMD in 1954 whereas No. 1205 was built in 1955.
The auction announcement posted on the AOS website said the museum will on occasion “refine” its collection by adding or selling locomotives and rolling stock.
The explanation indicated that some items were not used by railroad during the “age of steam” while others are redundant to the collection or are in poor condition.
Additional information about the auction can be found at: http://www.ageofsteamroundhouse.org/collection-refinement/
The story of intermodal freight shipments these days is one of contrasts.
At a time when the trucking industry has surplus capacity, truckers are cutting their rates in an effort to chase business.
Railroads, though, generally are increasing their rates.
The Association of American Railroads reports that in 2019 intermodal enjoyed its second highest volume year on record but the Intermodal Association of North America reported that domestic intermodal volume fell 6.1 percent last year.
J.B. Hunt, a trucking company working with railroads to offer intermodal service, reported that in 2019 its intermodal volume fell for the first time.
Yet Hunt executives remain optimistic that there is business to be had that can be diverted from trucks, including in the eastern United States where the market for intermodal is most challenging.
“In today’s environment, there is a challenge to grow in the east because the customers are able to secure truckload capacity at rates equal to or better than intermodal,” said Darren Field, J.B. Hunt’s executive vice president of intermodal, during a company earnings call this month.
Field said those challenges will continue until Hunt and its railroad partners can offer economics and service that outperform what trucking companies offer.
Some analysts question whether intermodal is any longer a growth industry.
They note that Hunt’s intermodal profits grew 2 percent during the past six years. During a six-year period prior to that intermodal profits enjoyed 11 percent growth.
One source of the loss of intermodal volume has been a decision by CSX to drop intermodal service from hundreds of what it termed low-volume lanes in 2017 and 2018.
Norfolk Southern is taking similar steps with its “yield-up” pricing intermodal strategy.
Both railroads contend that these changes will result in improved and more consistent service.
Field said Hunt has noticed that NS and CSX did improve their service in the second half of last year.
Nonetheless, Hunt reported that its intermodal volume declined by 3.4 percent last year, to 1.9 million loads.
Loads in the eastern region of the country fell in all four quarters of 2019.
A bright spot for Hunt was that transcontinental loads rose in the third and fourth quarters.
Field said Hunt managers believe there are 8 million to 10 million loads it can convert from highway to intermodal.
“The reality is we have to produce the combination of economics and service that convince that customer base that intermodal is the right solution for them,” he said.
Intermodal traffic is about half of all rail freight volume and is split about 50-50 between international and domestic loads.
Residents of East Chicago, Indiana, are protesting a move by Canadian National to expand its facilities in that city.
CN wants more room to store freight cars used by local shippers.
But residents of the Chicago suburb contend that CN will use the additional capacity to store tank cars filled with petroleum coke, a refining byproduct that can be used as fuel.
East Chicago officials say CN will store the petroleum coke in their city until it is ready to be moved for export overseas.
The petroleum coke will come from a BF refinery in nearby Whiting, Indiana.
CN needs approval from the Indiana Department of Environmental Management because the railroad plans to fill in wetlands regulated by the state in order to increase track capacity.
“Petcoke is a product that is being chased out of every other community, and they’ve all found their power to stand up,” said Thomas Frank, an East Chicago resident and member of the Southeast Side Coalition to Ban Petcoke.
“What this shows is that there is still a vacuum of power here with these big polluters.”
The area where CN wants to expand is located near a U.S. Environmental Protection Agency Superfund site that is contaminated with lead and arsenic from industrial activity.
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