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Transcript of Energy and commodity price benchmarking and market · PDF fileEnergy and commodity price...
London, Houston, Washington, New York, Portland, Calgary, Santiago, Bogota, Rio de Janeiro, Singapore, Beijing, Tokyo, Sydney, Dubai, Moscow, Astana, Kiev, Porto and Johannesburg
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Market Reporting
Consulting Events
Energy and commodity price benchmarking and market insights
Peak season ahead: Will railroads be prepared? Southwest Association of Rail Shippers, San Diego, California
Todd Tranausky US transportation editor 9 October
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Argus Publications
• Argus covers all aspects of transportation
• Argus Rail Business focuses on policy and regulation
• Publications Argus Coal Transportation and Argus Petroleum Transportation are commodity focused
Copyright © 2014 Argus Media Ltd. All rights reserved.
Peak season plans
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Why is it a peak season?
Why are regulators concerned?
Will the railroads be ready?
Peak season plans and railroad readiness
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• Board has asked for annual reports on rail service plans for the last decade
• Annual exercise more exhaustive in 2014, with more detailed responses from carriers
• Tied to intermodal “peak season,” but can provide general network insights
Peak Season: Some background
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• Regulators focused on fall peak because of service complaints
• Shippers concerned about railroads’ ability to meet demand over winter
• Potential regulatory remedies could cause more harm than good
Focus on service issues
• Legislation introduced in House and Senate will be moved in some form during 2015
• Unlikely to gain traction this year barring a major accident
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• Slower trains lead to congestion, stressing crew and locomotive resources
• Asset shortfalls and congestion create longer turn times for shippers
• Some railroads taking as long as 50 days to turn a tank car for customers
Train speeds decline
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• Board focused not just on freight, but on passenger service as well
• STB unlikely to use emergency service order powers; focused on transparency and data reporting
• Disproportionate commodity or Amtrak focus could degrade the entire system
Freight and passenger problems
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The road ahead
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• Railroads struggling to cope with traffic gains as geographic shifts cause complications
• Unpredictable cycle times make shipper and network planning difficult
• Winter looms on the horizon and not much has been done to prevent further service meltdowns
• Service has ‘stabilized at unacceptable levels’ in recent weeks
Volumes gaining, trains slowing
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Western rails
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BNSF capital spending to double-track main route through the oil fields
Glasgow subdivision double-track segment completed this summer; more to come
Congestion causes carriers to look at stronger routing protocols around the city
Tower 55 project work causes significant work windows, re-routes
BNSF, CP look for solutions to joint infrastructure in the city
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Eastern rails
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As carriers seek alternative interchange points, smaller yards take on more volume
Congestion ripples into this complicated interchange terminal
Winter snarls interchange, never fully recovered
Track and signal projects over summer on primary route for loaded crude and ethanol for CSX
CSX and NS struggle on routes from Toledo to Chicago
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National rails
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Are the railroads ready and will winter cooperate?
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• Railroad officials have said spring 2015 is the earliest shippers can hope for recovery
• Delays have not been solved, even with some high-profile projects coming online
• We will see the effects of routing protocols this winter and whether efforts to shift traffic were successful
Railroads simply not prepared for peak, winter
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• Additional traffic volumes would complicate service recovery
• Railroads have aggressively staffed ahead of winter, but are facing locomotive shortages
• There will be only one locomotive builder starting in 2014 and several railroads are heard to be significantly short of power
Another winter like 2013-14 would be a disaster
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• Locomotive and crew planning requires long lead times that cannot be addressed overnight, esp. given constraints
• UP said earlier this year it has no surge/spare capacity left
• Sources said privately CSX was about 350 locomotives short of what it needed
No easy answers
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• Trains are not able to get through yards in the northern tier
• Weather would deepen these issues
• Utilities already scrambling for coal
Terminal dwell
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Service issues cloud regulatory picture
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Railroads
Captive, bulk
shippers
Regulators and
legislators
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• Next year, Congress will act on at least one, possibly two pieces of legislation affecting railroads and shippers
• Ag interests can wield power if Republicans take control in the Senate
• Could bring change to the STB using service as a rationale
Service woes could strengthen Congressional resolve
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• Two of three STB board members are relatively new, bringing new experience and ideas
• Could lead to more willingness to examine or try new alternatives to disputes, service woes
• Not yet certain that chairman will be renominated when term expires at year end
Board changes lead to potential action
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Railroads face challenges meeting demand
Winter will exacerbate those issues
Problems could linger well into 2015, if not beyond
Conclusions
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Any questions?
Todd Tranausky US transportation editor [email protected] 202-349-2894 Washington, DC https://www.argusmedia.com
Copyright notice Copyright © 2014 Argus Media Ltd. All rights reserved. All intellectual property rights in this presentation and the information herein are the exclusive property of Argus and and/or its licensors and may only be used under licence from Argus. Without limiting the foregoing, by reading this presentation you agree that you will not copy or reproduce any part of its contents (including, but not limited to, single prices or any other individual items of data) in any form or for any purpose whatsoever without the prior written consent of Argus. Trademark notice ARGUS, ARGUS MEDIA, the ARGUS logo, DEWITT, FMB, FUNDALYTICS, METAL-PAGES, JIM JORDAN & ASSOCIATES, JJ&A, ARGUS publication titles and ARGUS index names are trademarks of Argus Media Limited. Disclaimer All data and other information presented (the “Data”) are provided on an “as is” basis. Argus makes no warranties, express or implied, as to the accuracy, adequacy, timeliness, or completeness of the Data or fitness for any particular purpose. Argus shall not be liable for any loss or damage arising from any party’s reliance on the Data and disclaims any and all liability related to or arising out of use of the Data to the full extent permissible by law.