Total Week 50 rail vols were up 1.6% y/y, relatively improved from flattish the past 2 weeks and the best y/y growth for the rails in 13 weeks. Vols are still tracking down 0.7% QTD in 4Q vs. +1.7% in 3Q. Last week, we reduced our 4Q vol. expectations for the rails, and vols are now slightly above our reduced expectations with 2 weeks of data left in the qtr.
Total Week 50 rail vols were up 1.6% y/y, relatively improved from flattish the past 2 weeks and the best y/y growth for the rails in 13 weeks. Vols are still tracking down 0.7% QTD in 4Q vs. +1.7% in 3Q. Last week, we reduced our 4Q vol. expectations for the rails, and vols are now slightly above our reduced expectations with 2 weeks of data left in the qtr.
Total Week 49 rail vols were up 0.2% y/y, relatively improved from -0.8% and flattish the past 2 weeks. Vols are now tracking down 0.9% QTD in 4Q, down from +1.7% in 3Q and below our prior expectations for flattish vols in the qtr.
We are lowering our EPS estimates for the rails based on weaker than expected vols in 4Q and moderating y/y service metrics, offset partially by lower fuel. On avg. we’re lowering our 4Q EPS by 2% and we’re now 3% below Cons. Based on weakening export coal vols and pricing, we see the most EPS risk for the eastern rails in 4Q. After years of favoring rail stocks, we lowered our sector rating to Market Weight in Oct. based slowing overall rail pricing, weakening export coal vols and pricing, and ongoing structural utility coal headwinds for the eastern rails. CP remains our favorite stock based on its massive turnaround potential the next several years, as well as its high-end crude oil and low-end utility coal exposure.
This weekly report presents the most recent views we are hearing from industry insiders and summarizes the research of Wolfe Trahan. 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.
Total Week 48 rail vols were down 0.8% y/y, slightly worse than flattish vols the past 2 weeks as vols for the western rails were negatively impacted by the port strike at LA/LB. Vols are now tracking down 1.0% QTD in 4Q, down from +1.7% in 3Q and below our expectations for flattish vols in the qtr. So far in 4Q, vols are trending below our expectations for KSU, CSX, CP, and UNP, and slightly above our expectations for NSC and CNI.
Total Week 46 rail vols increased 0.2% y/y, improved from -0.9% and -4.8% the prior 2 weeks as vols inflected positive y/y for the 1st time in 6 weeks, led by strength at the Canadian rails. Vols have increased sequentially the past 2 weeks following Hurricane Sandy but vols are still tracking down 1.2% QTD in 4Q, down from +1.7% in 3Q and below our expectations for flattish vols in the qtr. Vols so far in 4Q are trending most below our expectations for KSU, CSX, and CP.
Total Week 44 rail vols declined 4.8% y/y, down from -1.3% and -0.7% the past 2 weeks. Vols were negative y/y for the 4th straight week and dropped 6% sequentially due to Hurricane Sandy. While eastern rail vols were most impacted by the hurricane as expected, interchange traffic for all the other rails was impacted to a lesser extent as well, so we don’t read much into the deceleration in vols this week beyond the impact of the storm.
Total Week 42 rail vols declined 0.7% y/y vs. -1.0% and +0.2% the past 2 weeks. Vols were negative y/y for the 2nd straight week and are now trending up just 0.2% y/y the past 6 weeks, decelerated from +1.7% during 3Q. On the positive side, vols ticked up slightly sequentially (+0.6%) after falling the past 2 weeks.
Total Week 41 rail vols declined 1.0% y/y, down from +0.2% and +0.5% the past 2 weeks. This ended 18 straight weeks of positive y/y rail vols. Vols are now trending up just 0.4% y/y the past 6 weeks, decelerated from +1.7% during 3Q. Vols have also declined sequentially the past 2 weeks to start 4Q which is seasonally normal.