Q3/20 was a very tough quarter. Earnings mostly “slightly disappointed” raised Street expectations that followed the late summer volume jump led by intermodal. The quarter may have ended well, but the rail network is not really built for the sharp (“shark’s tooth”) volume gyrations engendered by the pandemic that it experienced over the last two quarters. As such, it is very hard to draw broad conclusions from the data, or the commentary….
- Except perhaps that ESG is the flavor of the day – but as pointed out by our RT Innovator of the Year CSX CEO Jim Foote, that you have to provide good transportation value (price/service) to even enter the ESG conversation with a shipper. That said, it surely isn’t going away and in fact, offers some real advantages to rail.
- Rails' ability to prove out stability (in margins, cash flow) in unstable (volumes) times shows their ability to “flex” variable and semi-variable costs and is a lesson-learned by the investment community.