Railroads - Post Fireworks Catsup

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My last note got caught up in the holiday rush to mingle, as did I – so I am resending it….with the following additions, and or corrections:


  • CSX re-filed its merger application for the Pan Am Railway with the STB, again. 
  • CSX has also been the focus of the harsh commentary about recent rail service, when in fact, by the metrics, it hasn’t been so bad.  But remember, politically, perception = reality – see slide and STB Metrics info Surface Transportation Board (stb.gov)
  • RTI (AAR’s monthly rail traffic) will be out later this week, perhaps tomorrow, and we’ll be back to you for the brief earnings Preview, perhaps the last one where comparisons are mostly meaningless….
  • Stay in my lane?  After my dialogue about service jobs and empty tables in Louisville, the jobs report was a big positive.  It shows either the weakness of anecdotal argument or the importance of it – you decide.  I am staying in my lane….
  • Fireworks - The last shots of the KSU “War of the Words”, pre-STB decision on the Voting Trust, were fired today (yesterday being the closing deadline of the discussion/rebuttal phase).  The headline of one-shot, “CN and KCS Emphasize (their) Compelling Case” well summarizes one position, while the rebuttal headline, “CN Continues to Duck Key Issues in V/T Filing with the STB” neatly does the other….Now, the talking (in public) is over, the determining is due….A decision is expected, with no hard reason, by ~the end of this month.  Clearly, the STB is a tad divided, representing differing alliances and appointment backers, perhaps - though I think I know what they might want to do (avoid negative downstream effects, make railroads more powerful vis a vis shippers, reward Wall Street), but what do (they think they) can do?  And what can they do that is appeal-proof?  The three outcome test, un-weighted,  suggests:


  1. The STB approves the VT, game over to CN
  2. The STB denies the VT with explicit, harsh language that freezes all future (transcon) mergers,  with one additional, possible 4th “outcome” - save for CP coming in to “rescue “ KSU
  3. The STB denies the VT but in weak language that encourages CN to continue their pursuit of KSU (perhaps even raising the bid to compensate for the time factor as we would await the STB merger review over the next….~12-18 months….


Anthony B. Hatch
abh consulting
Twitter @ABHatch18