KSU’s KCS weathers the storm with help from PSR -- KCS volumes were hit very hard by the demand destruction/C19 plant shutdown, but they have joined their peers in pulling down costs (adding in a surprise 7% management headcount reduction). With auto plants re-opening (in fits and starts) in Mexico, they, too, see the bottom in their (near) rear-view windows; Mexican sequential volumes are running up mid-teens. With carload volumes down ~25%, they have pulled train starts down 40%. 40% - that’s a big number. The national breakdowns are interesting – the US volumes down ~19% (better than the peer average) and strain starts down ~30%; Mexico is –35%/-45%. Train lengths are running up some 20% from the beginning of the year, and at just under 7K’ are already ~10% ahead of their FY
So KCS is, for the most part, continuing its recent successful PSR journey and preparing for the post C19 world, one that, judging by the number of questions, might be even enhanced by the aftereffects of C19, and of the running China tensions – summed up as “near-shoring’, the most hopeful “shore” in Mexico since the first hotel was built in Acapulco. But….will the effect of the reign of the “Tropical Messiah” (AMLO) overwhelm the distance advantages?