As the rail industry continues to evolve, the BR&CF
is looking forward to the future and serving our members.
CTY LTD Update
The purpose of this Information Bulletin is to bring everyone up to date
on what has happened since the CTY LTD Ratification.
Railroad workers have been fighting fatigue in the
rail industry for decades but the problem persists. We are now asking
you to help us document the problem.
Railways expected to pick
Source: The Globe and Mail
Published: July 21st 2008
Printer friendly version
It's been a tough quarter for Canadian railways —
flooding in the U.S. rendered tracks useless, a
strong dollar wiped out efficiency gains, fuel
prices ate into profits and demand for forestry
Still, Canadian National Railway Co. and Canadian
Pacific Railway Ltd. shares are up this year, 10 per
cent and 4 per cent, respectively, as investors bet
that locomotives will replace transport trucks as an
environmentally friendly way to haul commodities
from coast to coast.
"Rail is both a cheaper and greener way to move
freight, even if it may take a little while longer,"
said Tom Varesh, who covers both railways for
Canaccord Adams. "I think what we've seen in the
last couple of months has definitely put pressure on
railway stocks, and that weighs on some investors.
But I'm looking for a strong second half of the
year.' Analysts are looking for 87 cents a share
when CN reports Monday at the market's close, down
from last year's profit of 95 cents.
John Barnes, who covers railways for BB&T Capital
Markets, warned that CN earns most of its revenue in
U.S. dollars, but pays its costs in Canadian
dollars. So, while the railway has raised prices to
make up for rising fuel costs, much of the gains
"The weak U.S. dollar relative to the Canadian
dollar has masked the pricing increases," Mr. Barnes
said, adding that in past years investors could
count on the weaker Canadian dollar to add "several
pennies" to earnings per share each quarter.
Mr. Barnes said CN has fared better than its
competitors in maintaining freight volumes as the
economy worsens, but some key loads have been
declining. Forest products are the most profitable
to haul at $2,657 per car, but weakness in the U.S.
housing market has seen shipments slip 0.4 per cent
since 2003. Meanwhile, metals and mineral shipments
have increased by 26 per cent — at $818 a load.
"Forest products have declined another 14.2 per cent
year-over-year, year-to-date," he said. "It's a
trend we expect to continue as the economy works
through the excess supply of new homes in the
market. Sure, other commodity prices have increased,
largely filling most of the void. However, forest
products command the highest revenue per carload by
a significant margin."
Meanwhile, CPR releases second-quarter results
Tuesday. A profit of $1 is forecast, down from $1.12
last year. Mr. Varesh is looking for 92 cents a
share, with fuel and currency charges his main
"CP has faced various headwinds that negatively
affected earnings," he said. "While these headwinds
will likely result in another weak quarter, we
believe the worst is behind the railway and we
expect to see strong results in the second half of