More on the decline of Frieght Rail

[andersone]

Found this very interesting,,, the current decline of freight rail,,,,,,

http://wolfstreet.com/2016/05/04/freight-rail-traffic-plunges-aar-april-report-photos-idled-engines-transportation-recession/

I didn't think coal was as bad as this,,, I can see why CSX wants to disappear from the region,,m

 

[oregon pioneer]

Ooh, this is fascinating reading! I just can't stop clicking on the links in this article and reading more about the economy, the inventory glut, a coming recession...

"...the crucial inventory-to-sales ratio, which tracks how long inventory sits around in relationship to sales, has reached the level it spiked to in November 2008, just after the Lehman bankruptcy."

and:

"Railroads, which are getting hammered by the collapse in oil and coal shipments, have been aggressively eating up market share. So far this year, the American Association of Railroads has been reporting strong growth in intermodal (container), the direct competitor to trucking... And in the spot market, trucking has turned from bad to awful."

Sounds like printing money only goes so far... and it's time to fasten your fiscal seat belts.

 

[neroden]

We haven't printed money, actually. That's part of the general economic problem.

The major problem for railroads, however, is that oil and coal are both dying, simultaneously. Intermodal is actually doing pretty well, and the current downturn is more of a blip than anything else.

Coal is a very significant portion of the revenues of most of the Class I freights. I leave it as an exercise to the reader to determine which one is the exception.

Disclosure: I own stock in CNI. ;-)

 

[oregon pioneer]

We haven't printed money, actually. That's part of the general economic problem.

Just out of curiosity, how do you interpret Quantitative Easing, if it's not "printing money?"

 

[cirdan]

Sounds like printing money only goes so far... and it's time to fasten your fiscal seat belts.

I don't quite see the connection between printing money and intermodal replacing coal.

Would you care to elaborate?

 

[oregon pioneer]

Sounds like printing money only goes so far... and it's time to fasten your fiscal seat belts.

I don't quite see the connection between printing money and intermodal replacing coal.

Would you care to elaborate?

Well, I didn't really get there directly (I just clicked a lot of links from the original), BUT if you pursue some of the links referred to by the OP, you can end up here:

http://wolfstreet.com/2016/05/05/us-commercial-bankruptcies-chapter-11-liquidations-rise-end-of-credit-cycle-april-abi/ where it's explained that:

During good times, so earlier in the credit cycle, companies borrow money. Then, overconfident and lured by low interest rates and overoptimistic rosy-scenario rhetoric emanating from all sides, they do what the Fed and Wall-Street firms want them to do: they borrow even more money. Then reality sets in, and they buckle under this pile of debt.

The bankruptcy filings of Ultra Petroleum and Midstates Petroleum on Friday and Saturday brought oil & gas bankruptcies of companies rated by Fitch and other ratings agencies to 59. These two companies piled $3.1 billion in defaulted junk bonds and another $1.5 billion in defaulted loans on top of the growing mountain of defaulted oil & gas debt.

With these two bankruptcies, Fitch Ratings raised its high-yield energy default rate to an all-time record of 13% and now projects that by the end of 2016, this default rate will jump to an even more glorious record of 20%.

And of course, the big money is not really "printed" these days, it's just created digitally so it can be loaned out to keep the economy humming. But believe, me, I am not a financial expert, and I manage my own small amount of money very conservatively (because I don't like to be part of the boom-and-bust cycle). Still, this makes fascinating reading!