If you have never journeyed across a continent by train, it could make an excellent addition to your bucket list. I can think of few experiences that provide so comprehensive a snapshot of a national landscape.
When the railroads deliver earnings, the resulting snapshot of economic activity offers a parallel perspective for investors. CSX
CSX chugged in with an 11% increase in revenue, and a 22% boost to the bottom line over the prior year's dastardly period. Key to the estimate-beating performance was the company's best quarterly operating ratio on record, which came it at a lean 74.5%. This 230 basis-point improvement served to absorb some of the continuing weakness within the domestic coal sector, and indeed the entire industry has adapted remarkably well to reduced freight volumes by tweaking efficiencies throughout this tumultuous period. Canadian National Railway
Since it's been a while since we've enjoyed a spate of good news regarding domestic freight volumes, let's focus on the positives for a moment. For the first time since the financial crisis struck, every category of freight -- save for coal -- has entered positive territory for the industry as a whole (in year-over-year comparisons) so far in 2010. CSX saw its volumes of automotive cargo surge by 64%, phosphates and fertilizers by 32%, and metals by 27%. A Fool can certainly understand the resulting temptation to link these improving metrics with a stable and sustainable economic recovery, as most reports on these earnings have done. As I noted last month while discussing fellow bellwether Nucor, we certainly do have signs of noteworthy improvement.
On the other hand, now that we have journeyed more than a full year since the crisis first sent freight volumes plummeting, a perception trap is inherent in these comparative numbers. Industry wide volumes year-to-date remain more than 12% below corresponding levels in 2008.
Another sour note can be heard from the domestic coal market. Notwithstanding reports from coal miners Peabody Energy
Enjoying reduced reliance upon coal, and even a nice growth opportunity in coking coal exports from Teck Resources