Good day,
We’re still reeling over spending the day Wednesday at a conference of shippers and railroads in Washington, put together by a law firm where a former head of the National Transportation Safety Board is now a partner. A convention of totally dysfunctional families would be a better description of just the one day event, albeit one in which everybody is dressed in suits or dresses. After reading so much over the past months about bad relations between shippers and railroads, it is fascinating to get so many in the room. They tend to give lip service to the idea that things are getting better but what is clear is that the problems of last winter were only the latest fuel to a long-burning fire. Most shippers don’t have alternative shipping options; at least, that’s the theory. But the speech of Solvay North American president Mike Lacey about losing business to imported soda ash because of poor rail service was eye-opening; it shows that what some people might call a monopoly or a captive situation can never be completely immune from market pressures.
Did you know?
The automotive aftermarket parts market is growing faster than the traditional “in-person” market for aftermarket parts, according to a report by Technavio. “In the past couple of years, the sales of automotive aftermarket parts through e-commerce platforms have outpaced the traditional brick and mortar sales owing to digitalization,” Technavio said. But still, the “offline” share of the market was 92% in 2017. Technavio analysts forecast the automotive parts aftermarket in the US to grow at a CAGR of over 3% during the forecast period, according to their latest market research report.
Quotable:
“We were known to be the worst performing railroad in North America. We’ve reinvented ourselves and it’s based on the premise of precision scheduled railroading.”
–Canadian Pacific CEO Keith Creel speaking to analysts and investors on Thursday
In other news:
OPEC members at 110%
The members of the organization have quotas, but blew past them in September by 10 percentage points. (Platts)
A sale by Campbell Soups would be supply-chain related
Much-hyped acquisition was “botched” and distribution issues have plagued it (WSJ)
Bangkok is becoming a key in a growing Asian intermodal market
The Thai city is the hub for trucks coming out of southeast Asian nations to then be put on rails (The Loadstar)
A cleaner future of freight
Shell executive discusses his views on the fuels of the future (Politico sponsored content)
Minnesota seeks grants to fund rail projects
The number is small, but freight is the target (Progressive Railroading)
Final Thoughts
Another significant development from the railroad conference mentioned earlier was the speech by Kansas City Southern CEO Pat Ottensmeyer in which he indirectly criticized precision railroading and the Wall Street emphases in operating ratio. And then one day later, the CEO of Canadian Pacific, as mentioned here earlier, praises precision railroading and the moves on OR in the company. It is an industry split over this issue and the earnings season that is upcoming, and the calls that follow, should be extremely educational, interesting…and not unanimous.
Hammer down everyone!