Ignoring the “Hinterlands,” the heartland of America, as Jack Kemp Institute Senior Fellow Ike Brannon champions in his Forbes article, “Amtrak’s Expansion To The Hinterlands Will Be Costly To The Government &
Texas Central, the embattled high-speed rail project in the Lone Star State, appears to have taken a major step toward its own demise, as CEO and President of Texas Central Partners Carlos F. Aguilar stepped down on Sunday, June 12. From a non-legal standpoint, this appears to leave the project adrift after Aguilar had led it through a period of hope and through a sudden downturn in its legal fortunes. Legally, it is unclear that Aguilar’s departure will mean much, in light of an impending ruling by the Texas Supreme Court that would stop the project in its tracks, none of which have yet been built.
Many have been waiting for the ongoing battle at the Surface Transportation Board (STB) between Amtrak on one side and CSX, Norfolk Southern and the Port of Mobile on the other (Docket No. FD-36496) to resume on Monday, June 13. The issue was how much infrastructure would have to be built before Amtrak can run two daily round trips between New Orleans and Mobile.
I present this white paper (downloadable below) from the viewpoint of an observer and generalist, albeit one with more than 46 years of involvement in rail safety and policy issues, 36 years of which were “in the trenches” at the Federal Railroad Administration. The views and issues discussed should be tested against the seasoned judgments of qualified engineers, technologists, managers, line employees and data analysts. They are not native to any individual area of specialization. Only a dialogue involving transparency and rigor will yield clarifications and real progress.
WATCHING WASHINGTON, RAILWAY AGE JUNE 2022 ISSUE: At a late April Surface Transportation Board (STB) hearing, up bobbed aggrieved shipper witnesses, one following another as hammers in a pianoforte, much as Charles Dickens (Bleak House) amusingly described the successive appearances in chancery of 18 attorneys.
ASLRRA PERSPECTIVE, RAILWAY AGE JUNE 2022 ISSUE: The American Short Line and Regional Railroad Association 2022 Annual Conference and Exhibition came roaring back in May with participation and enthusiasm returning to pre-pandemic levels.
Widely reported excess freight from China due to shutdowns appears over-hyped, and a potential upcoming backlog (which is expected to arrive in the last week of June) is likely from inventory pull-forward, equipment challenges, and a challenged rail network. Our panelists—the head of a West Coast port, the CEO of a drayage company, and the CEO of a container consolidator and intermodal company— were bullish of 2022, but expect softness in 2023. Consumers continue to lean into “Dinner and Disney” in a spending shift.
On May 31, we held a discussion with five expert panelists who provided insights into the current state and outlook of the rail, locomotive and railcar leasing and manufacturing markets. Overall, railcar demand recovery has been driven largely by freight cars, but our panelists indicated that tank car utilization and rates are rising. If this continues and eventually leads to higher tank builds, it could be a margin tailwind for manufacturers. As for the broader railcar market, inquiries remain strong, but labor and disruptions could limit production. Locomotive upgrades remain solid.
A Class I railroad delivers Total Shareholder Returns (TSR) of 13.5%-14.5% assuming a stable stock market. The assumptions are 3.5%-4% price increases, 2% volume increase tied to GNP growth and expense increases held to 3% or below. With these assumptions, EPS grows by 10-10.5%, a dividend adds 1.3%, and buybacks add another 2.5% or more because of their effect on EPS. The railroad’s stock sells at a P/E of 20+. Everyone is happy, and rightfully so.
Frank N. Wilner’s commentary “Threats Lurk to STB Independence” (May 22, 2022) raises interesting issues reaching back to the 1700s. The U.S. Constitution, ratified in 1789, is patterned on the Massachusetts Constitution
