Most major North American freight railroads reported strong earnings for the first quarter 2011 versus first quarter 2010.
Following is a wrap-up for the quarterly earnings reported by the railroads to the investment community.
Not included is BNSF, which is privately held and does not report its financial results to the investment community.
Mention is made of each railroad’s operating ratio. Operating ratio is a railroad’s operating expenses expressed as a percentage of operating revenue, and is considered by economists to be the basic measure of carrier profitability. The lower the operating ratio, the higher is profit.
Canadian National reported a 31 percent increase in first quarter 2011 profit versus first quarter 2010. This comes following a 19 percent increase in CN profit for calendar year 2010.
CN’s operating ratio for the first quarter 2011 was 69 percent, slightly better than the 69.3 percent reported for first quarter 2010. The railroad’s fourth-quarter 2010 operating ratio was 63.6.
CN is primarily a Canadian railroad. Its U.S. holdings include what were formerly Detroit, Toledo & Ironton; Elgin, Joliet & Eastern; Grand Trunk Western; Illinois Central; and Wisconsin Central.
Canadian Pacific Railway was the only major North American rail system reporting a drop in profit for the first quarter 2011 compared with first quarter 2010. CP cited severe winter weather as the cause of its profit decline.
CP’s calendar-year 2010 profit increased by 39 percent.
The railroad’s first quarter 2011 operating ratio soared to 90.6 compared with 82.3 in the first quarter 2010. CP’s fourth quarter 2010 operating ratio was 77.6.
CP said its 15,143 employee count increased by 613 during the quarter, but gave no indication of whether it would add employees the remainder of 2011.
First quarter 2011 train speeds fell by almost 14 percent and the number of train accidents soared by 57 percent — both attributed to a dramatic increase in the number of avalanches in the Canadian Rockies and winter-long blowing snow throughout CP’s North American rail network.
Canadian Pacific is primarily a Canadian railroad. Its U.S. holdings include Class I Soo Line and regional railroad Delaware & Hudson.
CSX profit jumped 30 percent during the first quarter 2011 versus the first quarter 2010, the railroad reported April 19. This comes on the heels of a 35 percent improvement in operating profit for calendar year 2010.
The CSX employee headcount rose in March to 30,464 employees, up 3 percent from March 2010, the railroad said.
The CSX operating ratio for the first quarter 2011 was a record low 72.5 for any first quarter. The fourth quarter 2010 CSX operating ratio was 71.1.
CSX operates some 21,000 route miles in 23 states and the District of Columbia.
Kansas City Southern
Kansas City Southern’s first-quarter 2011 profit was almost double that of the first quarter 2010. This followed an 82 percent increase in profit for calendar-year 2010.
The employee headcount remained constant at 6,080. The railroad did not indicate whether it would be increasing its headcount in 2011.
The KCS first quarter operating ratio declined significantly, from 75.2 percent the first quarter 2010 to 73.8 for the first quarter 2011. The railroad’s fourth-quarter 2010 operating ratio was 73.2.
KCS operates some 3,500 route miles in 10 states in the Central and South-Central U.S., as well as Kansas City Southern de Mexico, a primary Mexican rail line.
Norfolk Southern reported a 26 percent increase in profit for first quarter 2011 versus first quarter 2010. This follows a 45 jump in NS profit for calendar-year 2010.
NS said it would add some 1,100 new workers during 2011, returning employment to the same level as in 2008.
NS operating ratio for first quarter 2011 was 77.1 percent, higher than the 75.2 percent in the first quarter 2010, owing, in part, to severe winter weather. The fourth-quarter 2010 NS operating ratio was 71.9 percent.
NS operates some 20,000 route miles in 22 states and the District of Columbia.
Union Pacific profit rose 24 percent in first quarter 2011 compared with first quarter 2010, This follows a 47 percent jump in Union Pacific profit for calendar-year 2010.
UP said the railroad would increase its 43,000 employee headcount by about 4,500 in 2011.
The railroad reported a best-ever first quarter operating ratio of 74.7 percent — one of the more difficult for railroads because of winter weather. The fourth quarter 2010 UP operating ratio was 73.2.
Union Pacific operates some 32,000 route miles in 23 states in the western two-thirds of the U.S.