From SCDigest's On-Target E-Magazine
- May 7, 2015 -
Logistics News: Q1 2015 Rail Carrier Review
Rail Carriers See Decent Results, Strong Pricing, Even as Volumes Mostly Flat
SCDigest Editorial Staff
US rail carriers had a positive but somewhat lackluster performance in Q1, with revenues and carloads basically flat, though continued gains in efficiency saw decent bottom line improvements for most.
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| Despite generally flat volumes, most of the rail carriers described a favorable pricing enviroment in Q1, more bullish in fact than most recent quarter. |
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We're back as usual every quarter with our review of the results and trends across freight modes, starting this week with US rail carriers, which all posted their results before the end of January.
We hope to cover the US truckload sector next week - if the reporting is complete - and then the LTL carriers the week after that.
Here we look at the four major Class I public carriers that make up the US rail sector (Burlington Northern is of course part of public company Berkshire Hathaway, but its results are not broken out in any detail and thus are not included)
We generally also report on year-to-date metrics, but since in Q1 the year-to-date and quarterly numbers are the same, there is no need for that additional reporting.
On a macro sense, Q1 was basically flat for US rail carriers, with the Association of American Railroads reporting that total US railcar volumes were up just 0.2% in Q1, at 6,385,680 total units. Traditional railcar volumes were up 0.3%, while the generally fast growing intermodal sector was up just 0.1% in the first quarter.
Despite generally flat volumes, most of the rail carriers described a favorable pricing enviroment in Q1, more bullish in fact than most recent quarters.
Union Pacific, for example, said it saw a rise in "core pricing" gains of 4% in Q1, much stronger than in most recent quarters, as shown in the chart below.
Changes in Core Pricing at Union Pacific in Recent Quarters
Average operating ratios, or operating expense divided by operating revenue, a key metric in the transport sector, improved 1 percentage point to 70.6%, but that was led by two carriers - Union Pacific and CSX - who both saw improvement of about 3 percentage points. Kansas City Southern was basically flat, while Norfolk Southern saw an increase of 1.2 percentage points.
Even just within the rail sector, Union Pacific's operating ratio is now almost 12 percentage points better than that of Norfolk Southern, and down to an impressive 64.8%.
The full Q1 rail results, compiled by SCDigest from each company's Q1 earnings materials, is provided below.
Q1 2015 US Rail Carrier Results
(Transportation Management Article Continued Below)
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