Скачать презентацию Rail Back on Track First Union Rail
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Скачать презентацию Rail Back on Track First Union Rail
Скачать презентацию Rail Back on Track First Union Rail
Rail – Back on Track First Union Rail Corporation Robert J. Blankemeyer VP - Acquisitions 2593 Wexford-Bayne Road Sewickley, PA 15143 724 -935 -5523 rob. blankemeyer@wellsfargo. com May 12, 2011 rob. blankemeyer@wellsfargo. com
Agenda Introduction Railroad Overview Shipper Overview Government Regulation Equipment The Future May 12, 2011 rob. blankemeyer@wellsfargo. com
First Union Rail Introduction ▪ A Wells Fargo Company - Top 4 U. S. Bank Holding Co. - $1. 3 trillion assets at bank - Top 3 Bank Leasing Company - Top 4 general service rail lessor - 90, 000+ rail assets Opinions are mine alone May 12, 2011 rob. blankemeyer@wellsfargo. com
Corporate Death Spiral The Beginning of the End Lower volumes + lower rates = Lower returns = Lower Capital Expenditures = Decreased Capacity & Service = ▪ Deferred Maintenance Lower volumes + lower rates = May 12, 2011 rob. blankemeyer@wellsfargo. com
Railroad Industry of late 1970 s – In the Throes of the Death Spiral 40% of industry in bankruptcy CR, CRIP, MILW, etc. Specter of nationalization Declining market share Cumbersome pricing structure Difficult abandonment process Heavy government regulation May 12, 2011 rob. blankemeyer@wellsfargo. com
Death Spiral Reversed – How? Staggers Rail Act Eased abandonment process Gave Railroads pricing parameters Industry Consolidation Mergers rationalized cost structure Dramatic reduction in employees; productivity Boom in short lines and regional railroads New tenor of government regulation Let the market decide May 12, 2011 rob. blankemeyer@wellsfargo. com
Railroads at the Crossroads Railroads can envision a virtuous cycle: Higher volumes + higher rates = Higher returns = Higher Capital Expenditures = Increased Capacity & Service = Higher volumes + higher rates = Intermodal is a key driver May 12, 2011 rob. blankemeyer@wellsfargo. com
Railroad Virtuous Cycle Volume growth means more customers Service Improvement means happier customers Volume + Service = Productivity (“incremental margins”) means happier shareholders Return Growth means happier shareholders and high levels of Capex (happier suppliers) – no “battle for cash” May 12, 2011 rob. blankemeyer@wellsfargo. com
How Did Railroads Survive and Thrive in 2008 and 2009? The Great Recession of 2008 and 2009 was the 3 rd worst rail recession in last 100 years 15+% loss of traffic – loads and revenues Railroad’s Response Flexed market pricing power Increased network fluidity Trimmed work force Continued major expansion projects May 12, 2011 rob. blankemeyer@wellsfargo. com
Class I Railroad Net Income May 12, 2011 rob. blankemeyer@wellsfargo. com
Railroad Capex Expenditures May 12, 2011 rob. blankemeyer@wellsfargo. com
Railroad Capex Comments 90%+ of all expenditures maintain existing physical plant Little/no capex is used for expansion Public private partnerships are new paradigm – Heartland , Gateway and Crescent Corridors Leasing companies and shippers supply over 70% of railcars Railroads can avoid this Capex May 12, 2011 rob. blankemeyer@wellsfargo. com
Rail Assessment Strengths: Strong Secular Growth – above GDP Favorable Market Structure – Mega-carriers Supply Constraints – Infrastructure issues of other modes Solid Barriers to Entry Limited Alternatives – truck, marine 13
Rail Assessment Challenges - Capital intensity – CAPEX intense (15% to 19% of gross revenues) - Capacity bottlenecks – Low hanging fruit is gone - Interdependent Supply Chain - Can other modes keep up? Port congestion - Reliability vs. trucks 14
Rail Assessment Threats - Economic malaise - Rising capital requirements - Regulation - Maritime trade flows ▪ Panama Canal is a game changer ▪ Super Container Ships – 18, 000 TEUs 15
Future Growth Potential Grain – US is the world’s breadbasket Coal – Met Exports; PRB coal to China? MSW (garbage), perishables, shale, others Hub and Spoke vs. direct T/L issues: Drivers, Oil, Carbon, Infrastructure & Efficiency so…. Intermodal – International and Domestic Trucking companies becoming partners Domestic intermodal grew during recession 16
Shipper Nirvana “I want it there when I want it, on time, damage-free at a cost of next to nothing. ” Anonymous shipper 17
Shipper Concerns Capacity! How can I move my product? Service! Will it get there when needed? Then…. rates… How much will it cost? Trucker issues very much on shippers’ minds Affecting political decisions – Shippers easing away from re/reg fights to partnerships 18
Shipper Policy Concerns Infrastructure deficit Tax policy Carbon Oil independence Efficiency Passenger Rail – Help or hurt? 19
Shipper Concerns 2003 – 221 of Fortune 500 report on carbon; 409 in 2009 Green supply chains enforcement by Wal. Mart (from $2 BN transport spend to $4 BN+ by ’ 11); GE, P&G, etc…. As go large multi-nationals so go all Anticipating future EPA regs and emissions law 20
Government Regulation Railroads were the first regulated entity Interstate Commerce Commission - 1887 #1 Issue Today – Positive Train Control – PTC $10 BN mandate; cost/benefit ratio of 22: 1 Hazardous Material TIH/PIH protection wanted Passenger Rail Supported but not at expense of freight Trucking Hours of Service (HOS) regs 21
Government Regulations - Trucking HOS Driving time recommended from 11 hours to 10 hours Work day (driving and admin) can be extended to 14 hours/day; 16 hours 2 x/wk But can only work 13 hours (break of 1 -3 Hrs) Required rest breaks (30 mins. 1 st 7 hrs - 1 hr a day) Now, no limit on consecutive hours of driving/no required break 34 hour restart – Game Changer Drivers can’t drive after working more 60 hrs in any 7 day period; now 60 hrs/7 days or 70 hrs/8 days Driver must be off-duty 34 hours and must include 2 periods of midnight to 6 am; now just 34 hrs 22
Government Regulations - Trucking HOS Impact Additional truck and drivers needed. Shorter length of haul resulting from 10 -hour restriction Inability to serve rural markets Increased costs Less efficient dedicated operations Congestion at pick-up and delivery windows IT investment to reprogram distribution mgt. systems Unofficially, net-net will be: 5% to 7% productivity decrease Loss of 100, 000+ drivers; could be 300, 000 Increased trucker pay and trucking costs 23
2010 Interchange Fleet Info (through 12/31/10) Registered 1, 509, 795 1, 637, 746 UMLER Adjusted Active 1, 384, 996 1, 497, 455 Adjusted – P, Q and S car types counted by platform Data Source: Railinc Umler™ System. May 12, 2011 rob. blankemeyer@wellsfargo. com
2010 Interchange Fleet Changes from 2009 (through 12/31/10) Registered UMLER Adjusted -46, 850 -46, 339 Active -146, 973 -161, 895 Adjusted – P, Q and S car types counted by platform Data Source: Railinc Umler™ System. My opinion is that 100, 000+ cars have been retired/scrapped. May 12, 2011 rob. blankemeyer@wellsfargo. com
Equipment 285+k cars parked – 4/15/11 Down from 490+k at peak in 8/09 My estimate: 100 k to 150 k will never see service again Older, less efficient cars ▪ 263 k GRL versus 286 k GRL Costs to repair/maintain difficult to recover Cars installed prior to 7/1/74 have 40 year life ▪ Cost to rebuild and qualify for 50 -year life is not economically justified 26
AAR Car Type Codes A - Equipped Box Cars B - Unequipped Box Cars C - Covered Hoppers E - Equipped Gondolas F - Flat Cars G - Unequipped Gondolas H - Unequipped Hopper J - Gondola Car - GT May 12, 2011 rob. blankemeyer@wellsfargo. com
AAR Car Type Codes – Cont’d K - Equipped Hopper L - Special Type Cars P - Conventional Intermodal Q - Light weight, low profile intermodal R - Refrigerator Cars S - Stack Cars T - Tank Cars V - Vehicular Flat Cars May 12, 2011 rob. blankemeyer@wellsfargo. com
Active NA Ownership (through 12/31/10) Data Source: Railinc Umler™ System.
Age of NA Active Fleet (through 12/31/10) Data Source: Railinc Umler™ System.
New Car Additions 31
What Was Installed New in 2010 High cube, grain/DDG covered hopper – 3, 193 Small cube, cement covered hopper – 1, 519 Depressed, High Side Coal Gondola – 1, 294 GS, carbon tank car, 18. 5 k to 21. 5 k gal – 1, 006 Equipped Gondola, less 48’ – 750 Grain covered hopper 4 k to 5 k cf – 641 GS, carbon tank car, 21. 5 k to 24. 5 k gal – 558 GS, carbon tank car, 27. 5 k to 31. 5 k gal – 472 Data Source: Railinc Umler™ System.
What Was Installed New in 2006 to 2010 High cube, grain/DDG covered hopper – 40, 153 GS, carbon tank car, 27. 5 k to 31. 5 k gal – 30, 654 Depressed, High Side Coal Gondola – 27, 590 Small cube, cement covered hopper – 13, 773 Rotary, rapid discharge coal hopper – 11, 796 COFC, 5 unit, 40’ well Double Stack – 10, 195 GS, carbon tank car, 24. 5 k to 27. 5 k gal – 9, 014 SS, 340 psi pressure, 31. 5 k gal – 7, 700 Data Source: Railinc Umler™ System. March 7, 2011 rob. blankemeyer@wachovia. com
Locomotives – Road Units Next Tier of regs for road units are slated for 2015 OEMs need to develop new engines at cost of $1+BN Costs of retro-fits and overhauls are unknown Still hundreds of road units stored New orders will be abysmal for 2 years Scheduled railroading is increasing productivity 34
Locomotives – Switch Units Gen. Set locomotives appear to be wave of future 4 competing manufacturers – consolidation? Jury still out on “best” technology Government subsidized move through lower emissions ▪ Continued economic support is iffy Higher fuel costs may keep interest High initial cost continues to be an issue 35
The Future – Intermediate Term Above GDP++ Intermodal Domestic – 53’ Double Stack Cars and 53’ containers and chassis Above GDP Intermodal International – 40’ Double Stack Cars and 40’ containers and chassis Ag Products – Covered Hoppers Export Coal – Coal Gondolas and Hoppers Ethanol – Tank Cars and large Covered Hoppers
The Future – Intermediate Term GDP Growth Autos – Multi-Level Racks and Flat Cars Lumber – Boxcars and Flats Chemicals – Covered Hoppers and Tank Cars Aggregates – Small Covered Hoppers and Gons Metals – Gondolas Below GDP Paper Auto Parts
The Future – Intermediate Term Uncertain Domestic Coal – Impact of Nuclear ▪ Traditionally 40% of tonnage and 20% of revenues ▪ Market Share shrinks to 40% over next 15 years from approximately 50% ▪ Domestic source of energy ▪ Environmental Issues ▪ Clean Coal Technologies
CONCLUSIONS The “Story” used to be on either end of the pipeline, i. e. , either producers or retailers. Now the “Story” is the pipeline and rails are well positioned. 2011 will be a fantastic year for carriers Pricing increases in 6% to 8% range Traffic gains of 3% to 5% Better but not great for leasing cos. and builders Equipment winners will be traditional favorites – no surprises Recovery is underway but is “choppy” Housing will remain a “vast wasteland” Lease pricing is slowly improving Market is moving to shorter term operating leases 39
Epilogue Thank you for your attention. Questions? ? May 12, 2011 rob. blankemeyer@wellsfargo. com
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