Rail earnings affected by less demand

Marketplace Staff Apr 14, 2009
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Rail earnings affected by less demand

Marketplace Staff Apr 14, 2009
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Bill Radke: Here is one gauge of the economic challenges we face: corporate earnings. Later today, the big railroad CSX will announce first-quarter results. Joel Rose reports the shipping business can tell us a lot about this recession.


Joel Rose: If freight trains look shorter to you these days, it’s not your imagination. Rail carriers are hauling 20 percent fewer cars than they did a year ago.

Charles Rotblut: There’s less consumer demand. So you’re seeing less commodities being shipped, less materials being shipped, and all that’s weighing on the railroad sector.

Charles Rotblut is an analyst for Zacks.com. He says that’s one reason why Wall Street has scaled back its predictions for CSX and other railroad companies.

Lee Klaskow is an analyst with Longbow Research. He expects first-quarter numbers to be bad. What Klaskow wants to know is what CSX management predicts for the second quarter and beyond.

Lee Klaskow: As manufacturing builds and as inventories start building again, a lot of that is going on the railroads. So, you know, the rails tend to move three to six months before the overall economy does.

For his part, Klaskow doesn’t expect volume on the railroads to start picking up steam until the beginning of 2010.

I’m Joel Rose for Marketplace.

Radke: And full disclosure here, CSX is one of the underwriters of this program.

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