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Researched by Industrial Info Resources (Sugar Land, Texas)--If two recent press releases can serve as a harbinger of things to come, then the U.S. and Canadian freight railroads are likely to cite yet another drop in revenue in the upcoming round of corporate earnings reports.
Citing lower-than-anticipated volumes in bulk commodities, such as grain and potash, the wildfires in northern Alberta and a strengthening Canadian dollar, Canadian Pacific Railway Limited (NYSE:CP) (Calgary, Alberta) said Tuesday it now expects second-quarter 2016 revenues to decline by about 12% from the same quarter a year earlier. Huge wildfires in May caused the shutdown of as much as 1 million barrels per day (BBL/d) in oil sands production in Alberta, which in turn impacted rail shipments. For more information, see May 6, 2016, article - Canada's Oil Sands Production Takes Big Hit Due to Fort McMurray Fire.
The railway remains sanguine, however, saying it still hopes to meet its full-year guidance. "While we acknowledge the environment remains challenging, additional cost reduction opportunities and the potential for stronger volumes in the back half of the year still lead us to believe that achieving double-digit EPS [earnings per share] growth in 2016 is a possibility," said Chief Executive Officer E. Hunter Harrison. Industrial Info is following nine active Canadian Pacific capital projects worth $355.5 million, including a $54 million statewide network upgrade and rehabilitation program for this year in Minnesota.
The Association of American Railroads (AAR) reports that rail volumes in the U.S. and Canada remain down when compared with this time last year.
For the first 24 weeks of 2016, U.S. railroads reported cumulative volume of 5,773,236 carloads, down 13.3% from the same point last year; and 6,179,631 intermodal units, down 2.4% from last year, the AAR reported. Total combined U.S. traffic for the first 24 weeks of 2016 was 11,952,867 carloads and intermodal units, a decrease of 8% compared to last year.
For the week ended June 11, three commodity groups (petroleum & petroleum products, coal and metallic ores & metals) posted decreases compared with the same week in 2015. Increases were posted by miscellaneous carloads, motor vehicles & parts and grain.
Canadian railroads reported cumulative rail traffic volume of 3,062,509 carloads, containers and trailers for the first 24 weeks of the year, down 7.8% from the same period in 2015.
For first-quarter 2016, five North American railroads reported a drop in revenue compared with the same quarter of 2015. Weaker-than-expected freight demand prompted Canadian National Railway Company (CN) (NYSE:CNI) (Montreal, Quebec) to lower its financial outlook for 2016. Industrial Info is tracking 15 active Canadian National capital projects worth $721.90 million, including a $188.3 million grassroot intermodal and logistics hub in Milton, Ontario. Project kickoff is slated for first-quarter 2017, with completion currently scheduled for first-quarter 2019.
Lance Fritz, chief executive officer of Union Pacific Corporation (NYSE: UNP) (Omaha, Nebraska), said in April that "this year has brought a continuation of many of the same trends we experienced throughout most of 2015. An energy market recession, low commodity prices, the strength of the U.S. dollar in a soft global economy and muted domestic retail demand all contributed to market weakness across many of our business lines." Union Pacific reported a 14% drop in first-quarter revenues compared with first-quarter 2015, with volume declines in coal, industrial products and intermodal. Industrial Info is tracking 24 active Union Pacific capital projects worth $2.15 billion, including a $400 million rail switching and classification yard in Hearne, Texas. However, the kickoff for the project has been pushed back by at least a year, with the startup currently slated for late 2016.
Eastern U.S. freight rail carrier CSX Corporation (NASDAQ:CSX) (Jacksonville, Florida) also reported a 14% decline in first-quarter revenues, citing a 37% drop in coal revenue as many power providers continued a switch from coal to natural gas. Industrial Info is following 20 active CSX capital projects worth $1.46 billion, including a $272.6 million intermodal terminal in Selma, North Carolina. Kickoff is slated for second-quarter 2018, with completion in fourth-quarter 2019.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
Citing lower-than-anticipated volumes in bulk commodities, such as grain and potash, the wildfires in northern Alberta and a strengthening Canadian dollar, Canadian Pacific Railway Limited (NYSE:CP) (Calgary, Alberta) said Tuesday it now expects second-quarter 2016 revenues to decline by about 12% from the same quarter a year earlier. Huge wildfires in May caused the shutdown of as much as 1 million barrels per day (BBL/d) in oil sands production in Alberta, which in turn impacted rail shipments. For more information, see May 6, 2016, article - Canada's Oil Sands Production Takes Big Hit Due to Fort McMurray Fire.
The railway remains sanguine, however, saying it still hopes to meet its full-year guidance. "While we acknowledge the environment remains challenging, additional cost reduction opportunities and the potential for stronger volumes in the back half of the year still lead us to believe that achieving double-digit EPS [earnings per share] growth in 2016 is a possibility," said Chief Executive Officer E. Hunter Harrison. Industrial Info is following nine active Canadian Pacific capital projects worth $355.5 million, including a $54 million statewide network upgrade and rehabilitation program for this year in Minnesota.
The Association of American Railroads (AAR) reports that rail volumes in the U.S. and Canada remain down when compared with this time last year.
For the first 24 weeks of 2016, U.S. railroads reported cumulative volume of 5,773,236 carloads, down 13.3% from the same point last year; and 6,179,631 intermodal units, down 2.4% from last year, the AAR reported. Total combined U.S. traffic for the first 24 weeks of 2016 was 11,952,867 carloads and intermodal units, a decrease of 8% compared to last year.
For the week ended June 11, three commodity groups (petroleum & petroleum products, coal and metallic ores & metals) posted decreases compared with the same week in 2015. Increases were posted by miscellaneous carloads, motor vehicles & parts and grain.
Canadian railroads reported cumulative rail traffic volume of 3,062,509 carloads, containers and trailers for the first 24 weeks of the year, down 7.8% from the same period in 2015.
For first-quarter 2016, five North American railroads reported a drop in revenue compared with the same quarter of 2015. Weaker-than-expected freight demand prompted Canadian National Railway Company (CN) (NYSE:CNI) (Montreal, Quebec) to lower its financial outlook for 2016. Industrial Info is tracking 15 active Canadian National capital projects worth $721.90 million, including a $188.3 million grassroot intermodal and logistics hub in Milton, Ontario. Project kickoff is slated for first-quarter 2017, with completion currently scheduled for first-quarter 2019.
Lance Fritz, chief executive officer of Union Pacific Corporation (NYSE: UNP) (Omaha, Nebraska), said in April that "this year has brought a continuation of many of the same trends we experienced throughout most of 2015. An energy market recession, low commodity prices, the strength of the U.S. dollar in a soft global economy and muted domestic retail demand all contributed to market weakness across many of our business lines." Union Pacific reported a 14% drop in first-quarter revenues compared with first-quarter 2015, with volume declines in coal, industrial products and intermodal. Industrial Info is tracking 24 active Union Pacific capital projects worth $2.15 billion, including a $400 million rail switching and classification yard in Hearne, Texas. However, the kickoff for the project has been pushed back by at least a year, with the startup currently slated for late 2016.
Eastern U.S. freight rail carrier CSX Corporation (NASDAQ:CSX) (Jacksonville, Florida) also reported a 14% decline in first-quarter revenues, citing a 37% drop in coal revenue as many power providers continued a switch from coal to natural gas. Industrial Info is following 20 active CSX capital projects worth $1.46 billion, including a $272.6 million intermodal terminal in Selma, North Carolina. Kickoff is slated for second-quarter 2018, with completion in fourth-quarter 2019.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
