By Alexander Whiteman
Hurricane Harvey failed to derail North American operators as intermodal revenue continued to rise in the third quarter – international shipments bolstering double-digit net income gains. Kansas City Southern stood out as the sector’s star performer, with nine-month revenue up 11 per cent year-on-year, to $1.9 billion, resulting in $411 million in net income for the period. While intermodal revenue for the year to date only showed marginal gains at $266 million, the mode performed better in the third quarter with turnover up 4 per cent to $92.3 million. Revenue for the three months to September climbed 8 per cent to $656 million, with net income up 7 per cent to $129.9 million.
By Alexander Whiteman
CSX released its third-quarter results, and it seems it has something to cheer about. CSX reported a strong three months, with total volumes up 5 per cent to 718,000 carloads and revenue increasing some 5 per cent to $446 million, although revenue per unit saw a marginal dip. The carrier’s international Q3 volumes were up 11 per cent, “driven by new customers and strong performance with existing customers as eastern port volumes increased”.
Both of Canada’s major railways announced third quarter results for the period ended September 30. Although both carriers put in admirable performances, their results appear to point to a weakening economy.
During the quarter, CN’s revenues increased by 7 per cent to $3.22 billion. Operating expenses as a percentage of revenues increased from 53.3 per cent to 54.7 per cent. Cash flow from operations declined to $1.41 billion from $1.48 billion. However, “free” cash flow, the amount remaining from operating cash flow after subtracting net investments made during the quarter and dividends paid to investors, increased to $373 million from $310 million. During the first nine months of the year, “free” cash flow increased to $1.44 billion from $923 million. From Jan 1 to Sept 30, CN spent $1.543 billion repurchasing its own shares, and paid $932 million in dividends. As of September 30, the company’s equity stood at $15.1 billion (as compared to $14.8 billion as at December 31, 2016), while total debt declined to $22.0 billion from $22.2 billion (Dec 31, 2016). During the quarter, CN’s operating ratio slipped from 53.3 per cent to 54.7 per cent.
CN and Norfolk Southern announced a new joint interline service initiative is reducing transit times by one to two days for carload traffic between Western Canada and NS destinations in the Eastern United States.
This seamless interline service, established in August, allows freight to bypass traditional interchange points in Chicago, in favour of using the most efficient existing CN and NS routes. The service has reduced transit times by up to 48 hours, providing customers more efficient delivery to final destinations.
CN announced it moved a record 21.8 million metric tonnes of Western Canadian grain during the 2016-17 crop year. “Through innovation, collaboration and improved communication with our supply chain partners, CN moved more grain in a single crop year than ever before,” said Doug MacDonald, CN Vice-President, Bulk. “We did this by further developing our supply chain ingenuity with our partners to meet demand, resulting in improvements in the use of equipment and better than ever efficiencies in size of trains.”
In a year-end grain report, CN credited the introduction of 200-car grain trains to improve efficiency and turn equipment back to the Prairies faster, and the expanded use of distributed power and air repeater cars to extend train length and improve train braking during extreme weather winter months.
“We gave our customers what they were looking for by significantly expanding our commercial product offering,” said MacDonald. “CN expanded commercial agreements that guarantee car supply in advance to our customers both large and small. This commercially-driven innovation includes reciprocal penalties which drive accountability for both shippers and CN, and allows our customers to make market-based decisions.” Last crop year, customers secured approximately 70 per cent of CN’s car supply in advance under commercial agreements subject to car commitment guarantees.
Grain companies have continued to invest in the supply chain with the construction of nine new country elevators and another seven announced with completion dates in the next 18 months.
More rail capacity is needed in Vancouver to meet forecasted demand driven by new and ongoing investment in export grain terminals. Said MacDonald, “Vancouver is a vital trade-oriented Canadian gateway and should be a top investment priority for the government’s new national transportation corridor infrastructure fund.”
By Alex Lennane
The first train from the UK to China left London Gateway on April 10, heading for Yiwu, where it arrived on 27 April, with 30 containers carrying whisky, soft drinks, vitamins and pharmaceuticals. Rail services between Europe and China have seen a surge in volumes as services grow and shippers take advantage of the cost and speed benefits available.
While both of Canada’s major railways felt the effects of a weak economy, CN produced another quarter of stellar results, while CP produced more modest results.
During the quarter, CN’s revenues increased by just over 8 per cent to $3.3 billion. However, operating expenses rose by almost 9 per cent. Net income before income taxes rose from $1,099 million during the first quarter of 2016 to $1,183 million during Q1 of 2017. Cash flow from operations increased to $1,265 million during the period, up from $1,065 million during the same period of 2016. “Free” cash flow, the amount remaining from operating cash flow after subtracting net investments made during the quarter and dividends paid to investors, increased to $547 million from $303 million during the first quarter of 2016.
CN and Duluth Cargo Connect announced a new alliance establishing the first rail-served intermodal container ramp in the Twin Ports of Duluth, Minn. and Superior, Wisconsin. Duluth Cargo Connect, a working partnership of the Duluth Seaway Port Authority and Lake Superior Warehousing, will operate the rail-served facility at the port’s Clure Public Marine Terminal.
Canadian Pacific joined K+S Potash Canada (KSPC) in celebrating the grand opening of its Legacy Project mine site. The mine is the first of its kind built in Saskatchewan in more than 40 years, and the rail infrastructure built to serve the mine is the most significant engineering project undertaken by CP since the mid-1980s.
Canadian Pacific and Canadian Tire Corporation announced the deployment of North America’s first 60-foot intermodal container for use by the retailer. Page Content
The new containers will increase shipping productivity and efficiency, while helping to reduce freight carbon intensity.