Friday, May 24th, 2013
This weekly report presents the most recent views we are hearing from industry insiders and summarizes the research of Wolfe Research. Included are (1) key takeaways, selected shipper comments; (2) notices of upcoming industry events; (3) key takeaways from some of our notes from the past week; (4) recent stock performance for our transport universe; (5) updated comparison tables for the airfreight & logistics group, railroads, and trucking; and (6) fuel trends for West Texas Crude Oil, On-highway diesel, Rail diesel, and Jet fuel.
Filed under: Ed Wolfe & Scott Group, Railroads Tags: CGI, CNI, FWRD, GWR, JBHT, KNX, PACR, RRTS, SAIA, UACL, WERN
Friday, May 24th, 2013
Airlines at our conference. This week airlines presented at our 6th Annual Wolfe Research Global Transportation Conference. On Tuesday night we hosted a dinner with UAL management and on Wednesday we hosted three panels: a labor panel (consisting of three pilot unions), a growth airline panel (consisting of ALGT, JBLU, and SAVE), and a network airline panel (consisting of DAL, LCC, and UAL). In this note we provide highlights from the UAL dinner as well as the three panelists.
Filed under: Airlines, Hunter Keay Tags: AAMRQ, ALGT, ALK, CPA, DAL, HA, JBLU, LCC, LUV, SAVE, UAL
Friday, May 24th, 2013
As noted in our May 20 note, we believe that PJM capacity prices, set to be released this afternoon, could be flat to down due to tepid demand growth, increased imports, and new generation. We see new generation build as the key driver of the auction, so we took a more detailed look into the Cost of New Entry (CONE). We get a base case $182/MW-day but conclude that projects with economic/tax advantages or a higher risk tolerance could bid at or below last year’s $136-$167/MW-day range of clearing prices.
Filed under: Independent Power Producers, Integrated Utilities, Regulated Utilities, Steve Fleishman Tags: FE, PEG
Friday, May 24th, 2013
Transports with Most Momentum: KNX, RRTS, CNI, KEX sounded relatively best to us, and nobody sounded particularly bad
Filed under: Ed Wolfe & Scott Group, Railroads Tags: CGI, CNI, FWRD, GWR, JBHT, KNX, PACR, RRTS, SAIA, UACL, WERN, YRCW
Thursday, May 23rd, 2013
More Leases Potentially Coming On Balance Sheet. The U.S. and international accounting standard setters have jointly issued a revised proposal that would require almost all off-balance sheet leases to be accounted for on-balance sheet. We estimate that the proposal may add a cumulative $450 billion to assets and debt on S&P 500 companies’ balance sheets ($750 billion for Russell 3000 companies). If finalized, the proposal will significantly impact leverage levels, operating cash flow, EBITDA, return metrics, and earnings for companies that currently utilize off-balance sheet operating lease accounting.
Filed under: Accounting & Tax Policy, Chris Senyek
Thursday, May 23rd, 2013
Transports with Most and Least Momentum: CP, UNP and EXPD sounded relatively best, and NSC relatively worst on Day 1.
Filed under: Ed Wolfe & Scott Group, Railroads Tags: CP, EXPD, KSU, NSC, ODFL, UNP
Wednesday, May 22nd, 2013
Earlier articles (AP and Bloomberg) indicated that newly appointed Energy Secretary Moniz said he will put on hold ~20 applications to export LNG until he reviews studies by the Energy Department to see what the impact will be on natural gas supplies and prices. The articles indicate Moniz wants to review whether the data in the studies is outdated. Moniz did indicate that he wants to complete the review as quickly as possible. We remain optimistic that ultimately some level of exports will be approved (in addition to what has already been granted). However, this does add delay and increased political intervention in the process. Near-term we view this as a negative for companies with export projects in the queue: SRE, D and ETP.
Filed under: Steve Fleishman Tags: D ETE, LNG, SRE
Wednesday, May 22nd, 2013
This month’s Macro examines March and April data. As shown on Slide 8, freight vols on avg. declined 2% y/y in March and are tracking up less than 1% y/y based on preliminary April data after growing close to 3% the 1st two months of the year. Moreover, our proprietary Seasonal Freight Index (Slide 7) has dipped back below 50 the past 2 months after accelerating sharply late last year and early this year.
Filed under: Ed Wolfe & Scott Group, Railroads Tags: AAWW, ABFS, CGI, CHRW, CNI, CNW, CP, CSX, CVTI, EXPD, FDX, FWRD, GWR, HTLD, HUBG, JBHT, KNX, KSU, LSTR, NSC, ODFL, PACR, R, RRTS, SAIA, SWFT, TNTE.AS, UACL, UNP, UPS, UTIW, WAB, WERN, YRCW
Tuesday, May 21st, 2013
the Teamsters announced that local union leaders unanimously endorsed a new 5-yr contract with ABFS. Details of the tentative deal are now available after surprisingly little information leaked since the initial agreement was first announced.
Filed under: Ed Wolfe & Scott Group, Trucking Tags: ABFS
Tuesday, May 21st, 2013
We emailed out a 70-page report reiterating our bullish TL thesis. We recommend buying TL stocks into early signs of tighter capacity and our expectations for capacity to tighten further the next few months and lead to stronger TL pricing into 2014. We also published a 60-page report on the rails and our expectation for stronger coal vols ahead. Bound hard copies of both reports will be available at our Global Transport Conference on Wednesday, May 22 and Thursday, May 23. If you can’t attend our conference, email us for hard copies of either report.
Filed under: Airfreight & Logistics, Ed Wolfe & Scott Group, Railroads, Trucking Tags: CHRW, CNI, CP, CSX, KNX, R, SAIA, SWFT, UNP, WERN