By Alexander Whiteman
Hurricane Harvey failed to derail North American operators as intermodal revenue continued to rise in the third quarter – international shipments bolstering double-digit net income gains. Kansas City Southern stood out as the sector’s star performer, with nine-month revenue up 11 per cent year-on-year, to $1.9 billion, resulting in $411 million in net income for the period. While intermodal revenue for the year to date only showed marginal gains at $266 million, the mode performed better in the third quarter with turnover up 4 per cent to $92.3 million. Revenue for the three months to September climbed 8 per cent to $656 million, with net income up 7 per cent to $129.9 million.
President and Chief Executive Patrick Ottensmeyer said: “Third-quarter results were strong, even with Hurricane Harvey’s impact on Gulf Coast and cross-border traffic in August and September. “Despite the severity of the storm and widespread flooding, we recovered quickly, delivering record third-quarter operating income, a testament to our operations personnel, who worked tirelessly to restore our network. “We also want to thank our rail partners for their cooperation, as we worked together during this period to minimise the impact of the outage on our customers.”
At Norfolk Southern, the picture was similar, with the carrier posting a 16 per cent upturn in net income to $1.4 billion for the nine months to September, generated from $7.8 billion in revenue, up 6.8 per cent. NS’s nine-month intermodal revenue climbed substantially, by 9.2 per cent to $1.78 billion, with the pace of growth similar in the third quarter – up 8 per cent to $621 million. Q3 group revenue hit $2.6 billion, an increase of 6 per cent, while net income growth rose 10 per cent to $506 million. President and Chief Executive James Squires said NS was “unwavering” in its commitment to improve productivity, citing seven quarters of year-on-year growth as testament to this.
U.S. west coast operator Union Pacific recorded freight revenue of $14.7 billion, an increase of 7 per cent, leading to an 11 per cent rise in net income at $3.4 billion for the year to date. Intermodal revenue was up 3 per cent over the nine-month period, to $2.8 billion, with the company citing stronger international demand behind the upturn. The third quarter also fared well for UP as group revenue ticked up 4 per cent, year-on-year, to $5 billion, generating a 6 per cent increase in net income to $1.1 billion, with intermodal revenue up 3 per cent to $981 million.
While the U.S.-based operators reported all-round growth, Canadian National saw a 1.4 per cent drop in third-quarter net income, to C$958 million, with revenue growing 6 per cent to C$3.2 billion. Operating expenses grew 10 per cent as increased volumes led to higher fuel and operating costs, and President and Chief Executive Luc Jobin noted increasing staff numbers. “To meet the needs of an expanding North American economy and new growth opportunities, we are increasing investments in our infrastructure and equipment by C$100 million,” he said.
“During the third quarter, and continuing through the rest of the year, we’ve been hiring across our network, particularly in Western Canada, as we remain focused on delivering a superior service.” Intermodal revenue for both the quarter, and nine months, jumped 12 per cent to C$827 million and C$2.3 billion, respectively, with the carrier noting the impact on overall revenue: up 10 per cent to C$9.8 billion. Net income year-to-date rose 7 per cent to C$2.9 billion. The operator said: “The increase in revenue was mainly attributable to higher volumes of traffic in overseas intermodal, ‘frac sand’, coal and petroleum coke exports and Canadian grain.”
Reprinted courtesy of The Loadstar (www.theloadstar.co.uk)