Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
>>> Southwest Airlines reinstates dividend, sees strong travel demand
Reuters
December 7, 2022
https://news.yahoo.com/southwest-airlines-reinstates-quarterly-dividend-115829890.html
(Reuters) -Southwest Airlines Co on Wednesday became the first major U.S. airline to reinstate its quarterly dividend, more than two years after suspending it in the wake of the coronavirus pandemic.
U.S. airlines have benefited from pent-up demand for leisure trips and a gradual return of lucrative business travel, helping them post strong quarterly earnings despite worries of an economic slowdown.
"Our fourth-quarter 2022 outlook remains strong, and we have a solid plan for 2023," Chief Executive Officer Bob Jordan said in a statement.
In a regulatory filing ahead of its investor day on Wednesday, Southwest said it was expecting "strong leisure revenue trends" to continue into the first quarter of next year, while business travel was expected to improve.
The carrier also trimmed its fourth-quarter fuel cost forecast by about 5 cents per gallon, compared with its previous estimate.
Southwest declared a third-quarter dividend of 18 cents per share, the same level at which it was prior to the pandemic. The dividend will be paid on Jan. 31.
The airline did not detail any stock buyback plans, which have been fiercely opposed by unions, who have asked U.S. airlines to focus on investing in their workers and fixing operational issues.
As part of the federal COVID-19 relief package, airlines had been prohibited from buying back their shares. The ban, however, expired on Sept. 30.
<<<
---
>>> U.S. Congress averts railroad 'Christmas catastrophe,' Biden says
Reuters
December 1, 2022
By David Shepardson and Moira Warburton
https://finance.yahoo.com/news/1-biden-administration-makes-case-184803591.html
WASHINGTON, Dec 1 (Reuters) - Congress gave final approval to a bill blocking a national U.S. railroad strike that could have devastated the American economy but rejected a measure that would have provided paid sick days to railroad workers.
The U.S. Senate voted 80 to 15 on Thursday to impose a tentative contract deal reached in September on a dozen unions representing 115,000 workers, who could have gone on strike on Dec. 9.
The bill now goes to President Joe Biden, who will sign it into law. Once the bill becomes law, any strike would be considered illegal and the strikers could be fired.
Eight of 12 unions have ratified the deal. But some labor leaders have criticized Biden, a self-described friend of labor, for asking Congress to impose a contract that workers in four unions have rejected over its lack of paid sick leave.
"We have spared this country a Christmas catastrophe in our grocery stores, in our workplaces, and in our communities," Biden said in a statement that praised Congress for acting to avoid devastating economic consequence for workers' families.
A rail strike could have frozen almost 30% of U.S. cargo shipments by weight, stoke already surging inflation, cost the American economy as much as $2 billion a day and stranded millions of rail passengers.
The U.S. House of Representatives approved the bill to block a strike on Wednesday and separately voted to require seven days of paid sick leave for rail workers.
Paid sick leave was one of the outstanding issues in the negotiations. There are no paid short-term sick days under the tentative deal after unions asked for 15 and railroads settled on one personal day.
Teamsters President Sean O'Brien harshly criticized the Senate vote on sick leave. "Rail carriers make record profits. Rail workers get zero paid sick days. Is this OK? Paid sick leave is a basic human right. This system is failing," O'Brien wrote on Twitter.
The measure to provide seven paid sick days did not win the required 60-vote supermajority in the Senate and was not endorsed by the White House.
A total of 52 senators, including 44 Democrats, two independents and six Republicans voted to mandate sick leave for rail workers, while 42 Republicans and Democratic Senator Joe Manchin voted against it saying he was sympathetic to workers' concerns but said Congress should not "renegotiate a collective bargaining agreement that has already been negotiated."
CONGRESSIONAL POWERS
Congress invoked its sweeping powers to block strikes involving transportation - authority it does not have in other labor disputes - because of the significant impact a rail stoppage could have on the U.S. economy, especially at the height of the holiday shopping season.
The Senate earlier on Thursday rejected a proposal by Senator Dan Sullivan to extend the cooling-off period by 60 days to allow for further negotiations.
Biden has praised the proposed contract, which includes a 24% compounded pay increase over five years and five annual $1,000 lump-sum payments, and he had asked Congress to impose the contract without any modifications.
American Association of Railroads CEO Ian Jefferies praised the vote.
"None of the parties achieved everything they advocated for" Jefferies said in a statement and added "without a doubt, there is more to be done to further address our employees’ work-life balance concerns."
Without the legislation, rail workers could have gone out next week, but the impacts would be felt as soon as this weekend as railroads stopped accepting hazardous materials shipments and commuter railroads began canceling passenger service.
U.S. Chamber of Commerce CEO Suzanne Clark praised "Congress for averting a catastrophic rail strike" and called it "a win for our country."
Senator Bernie Sanders and others denounced railroad companies for refusing to offer paid sick leave.
"They are maybe the worst case of corporate greed that I have seen," Sanders said. "That is really barbaric in the year 2022 in America."
The contracts cover workers at carriers including Union Pacific, Berkshire Hathaway Inc's BNSF, CSX , Norfolk Southern Corp and Kansas City Southern.
<<<
---
>>> Skyworks and MediaTek Collaborate to Offer End-to-End 5G Automotive Solutions
BusinessWire
November 13, 2022
https://finance.yahoo.com/news/skyworks-mediatek-collaborate-offer-end-040200548.html
MediaTek and Skyworks Develop 5G New Radio Design Enabling Seamless Integration With Automotive Communications Systems
MUNICH, November 14, 2022--(BUSINESS WIRE)--Skyworks Solutions, Inc. (Nasdaq: SWKS) today announced that the company has engaged with MediaTek to offer a complete modem-to-antenna automotive-grade 5G solution. This 5G New Radio Sky5A RF front-end solution will accelerate the deployment of this cutting-edge protocol across an array of automotive OEM and consumer service offerings.
"The rollout of 5G is reshaping the automotive market with a variety of safety and entertainment telematics applications to improve the driving experience," said Martin Lin, deputy general manager of the Wireless Communications Business Unit at MediaTek. "Through this collaboration with Skyworks, MediaTek is providing OEMs and automotive customers a complete solution that offers high performance, reliability and flexibility to meet the growing demands for bandwidth and advanced connectivity in next-generation vehicles."
As automotive OEMs create entirely new vehicle platforms with cutting-edge processing and sensing capabilities to support advancements in electric vehicle (EV) technology, driver-assistance systems (ADAS), and artificial intelligence, they are looking for solutions that can support the expanded data and connectivity demands of these next-generation innovations.
"This strategic initiative allows Skyworks and MediaTek to address the stringent requirements of the global automotive industry," said John O’Neill, vice president of marketing at Skyworks. "Our combined engineering expertise enables our customers to innovate new vehicle communication architectures, with the confidence that their designs will continue to meet future bandwidth needs and the rapid evolution of global wireless networks."
The 5G NR Sky5A RF front-end complete solution was designed for automotive applications, supporting 3GPP R15 and R16 standards, bandwidth exceeding 100MHz, flexible antenna architectures, regional optimization, aux ports to support the addition of future bands, and full automotive grade reliability qualification.
Skyworks will be exhibiting at Electronica Stand B5-138, taking place in Munich from Nov. 15-18, 2022, where the company will be highlighting its latest infrastructure, IoT, automotive, timing and power solutions.
About Skyworks
Skyworks Solutions, Inc. is empowering the wireless networking revolution. Our highly innovative analog and mixed signal semiconductors are connecting people, places and things spanning a number of new and previously unimagined applications within the aerospace, automotive, broadband, cellular infrastructure, connected home, defense, entertainment and gaming, industrial, medical, smartphone, tablet and wearable markets.
Skyworks is a global company with engineering, marketing, operations, sales and support facilities located throughout Asia, Europe and North America and is a member of the S&P 500® and Nasdaq-100® market indices (Nasdaq: SWKS). For more information, please visit Skyworks’ website at: www.skyworksinc.com.
<<<
---
>>> O'Reilly Automotive, Inc. (ORLY), together with its subsidiaries, operates as a retailer and supplier of automotive aftermarket parts, tools, supplies, equipment, and accessories in the United States. The company provides new and remanufactured automotive hard parts and maintenance items, such as alternators, batteries, brake system components, belts, chassis parts, driveline parts, engine parts, fuel pumps, hoses, starters, temperature control, water pumps, antifreeze, appearance products, engine additives, filters, fluids, lighting products, and oil and wiper blades; and accessories, including floor mats, seat covers, and truck accessories. Its stores offer auto body paint and related materials, automotive tools, and professional service provider service equipment. The company's stores also provide enhanced services and programs comprising used oil, oil filter, and battery recycling; battery, wiper, and bulb replacement; battery diagnostic testing; electrical and module testing; check engine light code extraction; loaner tool program; drum and rotor resurfacing; custom hydraulic hoses; and professional paint shop mixing and related materials. Its stores offer do-it-yourself and professional service provider customers a selection of products for domestic and imported automobiles, vans, and trucks. As of December 31, 2021, the company owned and operated 5,759 stores in the United States, and 25 stores in Mexico. O'Reilly Automotive, Inc. was founded in 1957 and is headquartered in Springfield, Missouri.
<<<
---
O'Reilly Automotive - 3 Top E-Commerce Stocks to Buy Right Now
Motley Fool
By Bradley Guichard
Mar 27, 2022
https://www.fool.com/investing/2022/03/27/3-top-e-commerce-stocks-to-buy-right-now/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
Let's start with an unconventional e-commerce company. O'Reilly Automotive ( ORLY 1.54% ) probably isn't the first name that pops into your head when it comes to online shopping. However, its growth strategy has an omnichannel focus. Professional service providers can now place orders and receive local delivery with O'Reilly's proprietary platform made just for them. At the same time, DIY customers can do the same through the company's website.
O'Reilly could also capitalize on the enormous inflation we see in the new and used car markets. Gone are the days of haggling with the dealer for a deal well below the manufacturer's suggested retail price (MSRP). Instead, new car buyers are getting sticker shock. Thanks to dwindling inventories and the rising cost of new cars, used car prices have been up more than 40% over the past year. As a result, it's a good bet many drivers will be holding on to their vehicles longer, and the demand for parts from both professional service providers and DIY car owners will remain strong.
The company is already posting impressive results with revenue increasing to $13.3 billion in 2021, up 15%. The company's diluted earnings per share (EPS) also increased 32% to reach $31.10 last year. That was due in part to the company's lucrative share buyback program, which totaled nearly $2.5 billion in 2021 alone. O'Reilly stock has gained over 40% in the past year, and the company is set up to continue its impressive run long term.
<<<
>>> Top Railroad Stocks for Q1 2022
CP, CNI, and GBX are top for value, growth, and momentum, respectively
Investopedia
By MATTHEW JOHNSTON
February 01, 2022
https://www.investopedia.com/investing/railroad-stocks/
The railroad industry is one of the major components of the transportation sector and is closely tied to the economy's growth. Railroad companies operate vast networks that transport agricultural products, packaged foods, commodities, electronics, and other goods to companies and consumers. Major companies in the industry include Union Pacific Corp. (UNP), Norfolk Southern Corp. (NSC), and CSX Corp. (CSX).
The railroad industry does not have its own benchmark, but as a part of the broader transportation sector, its performance can be reasonably approximated by the iShares Transportation Average ETF (IYT). IYT has underperformed the broader market with a total return of 20.6% over the past 12 months, below the Russell 1000's total return of 23.0%.1 These performance figures and all others below are as of Jan. 11, 2022.
Here are the top 3 railroad stocks with the best value, the fastest growth, and the most momentum.
Best Value Railroad Stocks
These are the railroad stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
Best Value Railroad Stocks
Price ($) Market Cap ($B) 12-Month Trailing P/E Ratio
Canadian Pacific Railway Ltd. (CP) 74.75 49.9 20.2
CSX Corp. (CSX) 36.30 80.5 22.8
Canadian National Railway CO. (CNI) 122.28 86.4 23.3
Canadian Pacific Railway Ltd.: Canadian Pacific Railway is a Canada-based company that offers rail transportation services, including intermodal shipping, rail siding construction, and logistics services. The company announced in mid-December that it has completed its acquisition of Kansas City Southern (KSU), a cross-border railroad between the U.S. and Mexico, for approximately $31 billion. The shares of Kansas City Southern were placed in a voting trust upon the close of the acquisition, ensuring that the railroad operates independently of Canadian Pacific until the U.S. Surface Transportation Board makes a decision on the companies' joint railroad control application. The board's review of Canadian Pacific's proposed control of Kansas City Southern is expected to be finalized during the fourth quarter of 2022.2
CSX Corp.: CSX is a transportation company that provides rail, intermodal, and rail-to-truck transload services and solutions. It serves customers in a variety of markets, including energy, industrial, construction, agricultural, and consumer products.
Canadian National Railway Co.: Canadian National Railway is a Canada-based transportation company that offers fully-integrated rail and other transportation services, including intermodal, trucking, freight forwarding, warehousing, and distribution.
Fastest Growing Railroad Stocks
These are the top railroad stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company.
On Nov. 15, 2021, President Biden signed into law the Infrastructure Investment and Jobs Act, which will invest approximately $550 billion in America's roads and bridges, water infrastructure, resilience, internet, and more. Of this $550 billion, $66 billion will be allocated to improving America's passenger and freight rail system.3
Therefore ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 2,500% were excluded as outliers.
Fastest Growing Railroad Stocks
Price ($) Market Cap ($B) EPS Growth (%) Revenue Growth (%)
Canadian National Railway Co. (CNI) 122.28 86.4 81.7 11.5
CSX Corp. (CSX) 36.30 80.5 34.4 24.3
Trinity Industries Inc. (TRN) 30.87 3.0 57.1 9.6
Canadian National Railway Co.: See company description above.
CSX Corp.: See company description above.
Trinity Industries Inc.: Trinity Industries provides rail transportation products and services in North America. It offers railcar leasing and management services, as well as railcar manufacturing and modifications. The company announced in October financial results for Q3 of its 2021 fiscal year (FY), the three-month period ended Sept. 30, 2021. Net income attributable to shareholders rose 27.5% compared to the year-ago quarter. Revenue rose 9.6% YOY. Trinity Industries said that results were adversely impacted by labor shortages, turnover, and disruptions in supply chains, partly due to the economic impact of the COVID-19 pandemic. However, it expects profitability and demand for railcars to continue improving.4
Railroad Stocks With the Most Momentum
These are the railroad stocks that had the highest total return over the last 12 months.
Railroad Stocks with the Most Momentum
Price ($) Market Cap ($B) 12-Month Trailing Total Return (%)
Greenbrier Companies Inc. (GBX) 40.82 1.3 17.2
Union Pacific Corp. (UNP) 246.42 158.4 15.6
CSX Corp. (CSX) 36.30 80.5 14.7
Russell 1000 N/A N/A 23.0
iShares Transportation Average ETF (IYT) N/A N/A 20.6
Greenbrier Companies Inc.: Greenbrier Companies is a supplier of equipment and services to global freight transportation markets. The company designs and manufactures freight railcars and marine barges in North America, Europe, and Brazil. It also provides freight railcar wheel services, parts, maintenance, and retrofitting services in North America. Greenbrier announced in late October the appointment of President and Chief Operating Officer (COO) Lorie Tekorius, to the role of chief executive officer (CEO), effective March 1, 2022. Co-founder, Chairman, and CEO William A. Furman will assume the newly created role of Executive Chair on that same date.5
Union Pacific Corp.: Union Pacific connects 23 states in the western two-thirds of the U.S. by rail. It operates rail transportation services from all major West Coast and Gulf Coast ports to eastern gateways, connects with Canada's rail systems, and serves all six major Mexico gateways. The company announced in December that its board of directors approved a 10% increase in the quarterly dividend on the company's common shares, bringing it to $1.18 per share. The dividend was payable on Dec. 30, 2021 to shareholders of record as of Dec. 20, 2021.6
CSX Corp.: See above for company description.
<<<
>>> O'Reilly Automotive, Inc. (ORLY), together with its subsidiaries, operates as a retailer of automotive aftermarket parts, tools, supplies, equipment, and accessories in the United States. The company provides new and remanufactured automotive hard parts and maintenance items, such as alternators, batteries, brake system components, belts, chassis parts, driveline parts, engine parts, fuel pumps, hoses, starters, temperature control, water pumps, antifreeze, appearance products, engine additives, filters, fluids, lighting products, and oil and wiper blades; and accessories, including floor mats, seat covers, and truck accessories. Its stores offer auto body paint and related materials, automotive tools, and professional service provider service equipment. The company's stores also offer enhanced services and programs comprising used oil, oil filter, and battery recycling; battery, wiper, and bulb replacement; battery diagnostic testing; electrical and module testing; check engine light code extraction; loaner tool program; drum and rotor resurfacing; custom hydraulic hoses; and professional paint shop mixing and related materials. Its stores provide do-it-yourself and professional service provider customers a selection of products for domestic and imported automobiles, vans, and trucks. As of December 31, 2020, the company operated 5,616 stores. O'Reilly Automotive, Inc. was founded in 1957 and is headquartered in Springfield, Missouri.
<<<
>>> CSX Corporation (CSX), together with its subsidiaries, provides rail-based freight transportation services. The company offers rail services; and transportation of intermodal containers and trailers, as well as other transportation services, such as rail-to-truck transfers and bulk commodity operations. It transports chemicals, agricultural and food products, automotive, minerals, forest products, fertilizers, and metals and equipment; and coal, coke, and iron ore to electricity-generating power plants, steel manufacturers, and industrial plants, as well as exports coal to deep-water port facilities. The company also offers intermodal transportation services through a network of approximately 30 terminals transporting manufactured consumer goods in containers; and drayage services, including the pickup and delivery of intermodal shipments. It serves the automotive industry with distribution centers and storage locations, as well as connects non-rail served customers through transferring products from rail to trucks, which includes plastics and ethanol. The company operates approximately 19,500 route mile rail network, which serves various population centers in 23 states east of the Mississippi River, the District of Columbia, and the Canadian provinces of Ontario and Quebec, as well as owns and leases approximately 3,539 locomotives. It also serves production and distribution facilities through track connections. CSX Corporation was incorporated in 1978 and is headquartered in Jacksonville, Florida.
<<<
>>> Old Dominion Freight Line, Inc. (ODFL) operates as a less-than-truckload (LTL) motor carrier in the United States and North America. It provides regional, inter-regional, and national LTL services, including expedited transportation. The company also offers various value-added services, such as container drayage, truckload brokerage, and supply chain consulting. It owns 9,288 tractors and 42 maintenance centers. As of August 3, 2021, it owned 248 service centers. Old Dominion Freight Line, Inc. was founded in 1934 and is based in Thomasville, North Carolina.
<<<
>>> United Parcel Service, Inc. (UPS) provides letter and package delivery, transportation, logistics, and financial services. It operates through three segments: U.S. Domestic Package, International Package, and Supply Chain & Freight. The U.S. Domestic Package segment offers time-definite delivery of letters, documents, small packages, and palletized freight through air and ground services in the United States. The International Package segment provides guaranteed day and time-definite international shipping services in Europe, the Asia Pacific, Canada and Latin America, the Indian sub-continent, the Middle East, and Africa. This segment offers guaranteed time-definite express options. The Supply Chain & Freight segment provides international air and ocean freight forwarding, customs brokerage, distribution and post-sales, and mail and consulting services in approximately 200 countries and territories; and less-than-truckload and truckload services to customers in North America. This segment also offers truckload brokerage services; supply chain solutions to the healthcare and life sciences industry; shipping, visibility, and billing technologies; and financial and insurance services. The company operates a fleet of approximately 127,000 package cars, vans, tractors, and motorcycles; and owns 58,000 containers that are used to transport cargo in its aircraft. United Parcel Service, Inc. was founded in 1907 and is headquartered in Atlanta, Georgia.
<<<
$EXN Excellon Resources Inc., a silver mining and exploration company, acquires, explores for, evaluates, develops, and finances mineral properties in Mexico and Canada. The company primarily explores for silver, lead, zinc, and gold deposits. It holds 100% interests in the Platosa property covering an area of 11,000 hectares located in Durango State, Mexico; the Evolución property that covers an area of 45,000 hectares situated in the states of Durango and Zacatecas, Mexico; and the Silver City Project totaling an area of 164 square kilometers in Saxony, Germany. The company also holds 100% interests in the Kilgore Project that covers an area of 6,788 located in Clark County, Southeastern Idaho; and the Oakley Project covering an area of 2,833 hectares in Oakley, Idaho. Excellon Resources Inc. was incorporated in 1987 and is based in Toronto, Canada.
$IDEX 2021 Earth Day MEG China
$NAK The global rare earth market will grow in value from $8.1 billion in 2018 to more than $14.4 billion by 2025 as demand for electric vehicles, cellphones and other products rise.
$IDEX Ideanomics Mobility is a turnkey solution that provides economic and operational confidence. With a synergistic ecosystem of products and services, we are helping commercial fleets navigate the barriers of electrification across vehicles, charging and energy. From vehicle procurement, to charging infrastructure, to energy management, we are demystifying fleet electrification, and delivering the simplicity and scalability our customers are looking for.? https://ideanomics.com/our-company/
>>> Top Railroad Stocks for Q2 2021
CP.TO, CSX, and GBX are top for value, growth, and momentum, respectively
Investopedia
By NATHAN REIFF
Mar 17, 2021
https://www.investopedia.com/investing/railroad-stocks/?utm_campaign=quote-yahoo&utm_source=yahoo&utm_medium=referral
The railroad industry is one of the major components of the transportation sector and is closely tied to the economy's growth. Railroad companies operate vast networks that transport agricultural products, packaged foods, commodities, electronics, and other goods to companies and consumers. Major companies in the industry include Union Pacific Corp. (UNP), Norfolk Southern Corp. (NSC), and CSX Corp. (CSX).
The railroad industry does not have its own benchmark, but as a part of the broader transportation sector its performance can be reasonably approximated by the iShares Transportation Average ETF (IYT). IYT has outperformed the broader market with a total return of 78.4% over the past 12 months, above the Russell 1000's total return of 53.5%.1 The benchmark figures above and all statistics in the tables below are as of March 15.
Here are the top 3 railroad stocks with the best value, the fastest growth, and the most momentum.
Best Value Railroad Stocks
These are the railroad stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
Best Value Railroad Stocks
Price ($) Market Cap ($B) 12-Month Trailing P/E Ratio
Canadian Pacific Railway Ltd. ( CP.TO) CA$464.64 CA$61.9 25.8
CSX Corp. (CSX) 93.48 71.3 26.0
Union Pacific Corp. (UNP) 212.67 142.5 27.0
Canadian Pacific Railway Ltd.: Canadian Pacific Railway is a Canada-based company that offers rail transportation services, including intermodal shipping, rail siding construction, and logistics services. In early march, Canadian Pacific announced updates to its Hydrogen Locomotive Program, whose goal is to create a locomotive that produces zero emissions. In the latest development, Canadian Pacific plans to retrofit a diesel-powered locomotive with Ballard hydrogen fuel cells. It would be the first hydrogen-powered line-haul freight locomotive in North America.2
CSX Corp.: CSX provides domestic and international freight transportation services. The company offers rail, domestic container shipping, barging, intermodal, and contract logistics services between global hubs. The company's rail transportation services are focused in the eastern U.S. In February, CSX announced that its board of directors authorized an 8% increase in its quarterly dividend, from $0.26 to $0.28 per share. The new dividend was paid on March 15, 2021.3
Union Pacific Corp.: Union Pacific transports agricultural, automotive, chemical, and other products. The company provides routes from West Coast and Gulf Coast ports to eastern gateways, Canada, and Mexico.
Fastest Growing Railroad Stocks
These are the railroad stocks with the highest year-over-year (YOY) operating income, also called operating earnings, growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders. Operating income excludes non-operating income and expenses (such as investment gains or losses), one-time items, as well as interest and taxes. This helps investors get a clearer picture at the strength of the underlying business without the effect of unusual one-off events, such as large tax credits, asset sales, or lawsuit settlements. If you decided to invest in a company, it's still important to look at these one-off non-operating expenses and incomes, as they can still influence a company's overall financial health.
Fastest Growing Railroad Stocks
Price ($) Market Cap ($B) Operating Income Growth (%)
CSX Corp. (CSX) 93.48 71.3 5.3
Canadian Pacific Railway Ltd. ( CP) 372.40 49.6 2.6
Norfolk Southern Corp. (NSC) 260.27 65.6 1.4
Source: YCharts
CSX Corp.: See company description above.
Canadian Pacific Railway Ltd.: See company description above. Note that common shares of Canadian Pacific Railway Ltd. trade on both the Toronto Stock Exchange and the New York Stock Exchange.4
Norfolk Southern Corp.: Norfolk Southern is a rail transportation company operating primarily in the Southeast, East, and Midwest. The company transports raw materials, intermediate products, and finished goods. Through agreements with other carriers, it also provides service throughout the U.S., as well as transport of overseas freight.
Railroad Stocks with the Most Momentum
These are the railroad stocks that had the highest total return over the last 12 months.
Railroad Stocks with the Most Momentum
Price ($) Market Cap ($B) 12-Month Trailing Total Return (%)
Greenbrier Companies Inc. ( GBX) 48.83 1.6 172.2
Norfolk Southern Corp. (NSC) 260.27 65.6 80.5
Kansas City Southern ( KSU) 219.81 20.0 73.9
Russell 1000 N/A N/A 53.5
iShares Transportation Average ETF (IYT) N/A N/A 78.4
Source: YCharts
Greenbrier Companies Inc.: Greenbrier Companies is primarily engaged in the design, manufacture, and marketing of railroad freight car equipment. The company manufactures both railcars and marine vessels, provides repair and refurbishment for intermodal and conventional railcars, and provides complementary leasing and services. In February, Greenbrier announced plans to form GBX Leasing, a joint venture with The Longwood Group, a transportation equipment advisory and asset management firm. GBX Leasing will develop a portfolio of leased railcars primarily built by Greenbrier. The initial equity investment in the JV will benefit from specific tax advantages related to financial losses under the U.S. CARES Act passed in early 2020 to address the impact of the COVID-19 pandemic.5
Norfolk Southern Corp.: See company description above.
Kansas City Southern: Kansas City Southern is a holding company that, through its subsidiaries, operates a railroad system providing shippers with freight services in commercial and industrial markets in the U.S. and Mexico.
<<<
>>> Canadian Pacific to buy Kansas City Southern in $25 billion railway bet on trade
Yahoo Finance
Nandakumar D, Ann Maria Shibu and Rebecca Spalding
March 20, 2021
https://finance.yahoo.com/news/canadian-pacific-buy-kansas-city-034255096.html
Canadian Pacific to buy Kansas City Southern in $25 billion railway bet on trade
(Reuters) - Canadian Pacific Railway Ltd agreed on Sunday to acquire Kansas City Southern in a $25 billion cash-and-stock deal to create the first railway spanning the United States, Mexico and Canada, standing to benefit from a pick-up in trade.
It would be the largest ever combination of North American railways by transaction value. It comes amid a recovery in supply chains that were disrupted by the COVID-19 pandemic, and follows the ratification of the US-Mexico-Canada Agreement (USMCA) last year that removed the threat of trade tensions that had escalated under former U.S. President Donald Trump.
"Think about what we've gone through, think about the importance in North America of near-shoring that is occurring. This network uniquely provides a supply chain that allows our customers and our partners to actually benefit from that and leverage that opportunity," Canadian Pacific Chief Executive Keith Creel told Reuters in an interview.
The combination needs the approval of the U.S. Surface Transportation Board (STB). The companies expressed confidence this would happen by the middle of 2022, given that the deal would unite the smallest of the seven so-called Class I railways in the United States, which meet in Kansas City and have no overlap in their routes. The combined railway would still be smaller than the remaining five Class I railways.
The STB updated its merger regulations in 2001 to introduce a requirement that Class I railways have to show a deal is in the public interest. Yet it provided an exemption to Kansas City Southern given its small size, potentially limiting the scrutiny that its acquisition will be subjected to.
"I don't see it as the kind of consolidation that should raise concerns because it's what you call an end-to-end or vertical merger. Their networks fit nicely with each other and help fill out North America with real service," said economist Clifford Winston, a senior fellow at the Brookings Institution who specializes in the transportation sector.
An STB spokesman said the regulator had not yet received a filing from the companies, which would start its formal review process. He declined to comment further.
Still, Canadian Pacific agreed in its negotiations with Kansas City Southern to bear most of the risk of the deal not going through. It will buy Kansas City Southern shares and place them in an independent voting trust, insulating the acquisition target from its control until the STB clears the deal.
Were the STB to reject the combination, Canadian Pacific would have to sell the shares of Kansas City Southern, and one source close to the agreement suggested they could be divested to private equity firms or be relisted in the stock market. Kansas City Southern shareholders would keep their proceeds.
There is a $1 billion reverse breakup fee that Canadian Pacific would have to pay Kansas City Southern if it cannot complete the formation of the trust, the source added.
Shareholders of Kansas City Southern will receive 0.489 of a Canadian Pacific share and $90 in cash for each Kansas City Southern common share held, valuing Kansas City Southern at $275 per share, a 23% premium to Friday's closing price, the companies said in a joint statement. Including debt, the deal is valued at $29 billion.
Kansas City Southern shareholders are expected to own 25% of Canadian Pacific's outstanding common shares, the companies said. Canadian Pacific said it will issue 44.5 million shares and raise about $8.6 billion in debt to fund the transaction.
It is the top M&A deal announced thus far in 2021. While it is the biggest ever involving two rail companies, it ranks behind Berkshire Hathaway's purchase of BNSF in 2010 for $26.4 billion. For a Factbox on the deal highlights see:
Creel will continue to serve as CEO of the combined company, which will be headquartered in Calgary, the companies said in a statement.
The companies also highlighted the environmental benefits of the deal, saying the new single-line routes that would be created by the combination will help shift trucks off crowded U.S. highways and cut emissions.
Rail is four times more fuel efficient than trucking, and one train can keep more than 300 trucks off public roads and produce 75% less greenhouse gas emissions, the companies said in the statement.
FAILED BIDS
Calgary-based Canadian Pacific is Canada's No. 2 railroad operator, behind Canadian National Railway Co Ltd, with a market value of $50.6 billion.
It owns and operates a transcontinental freight railway in Canada and the United States. Grain haulage is the company's biggest revenue driver, accounting for about 58% of bulk revenue and about 24% of total freight revenue in 2020.
Kansas City Southern has domestic and international rail operations in North America, focused on the north-south freight corridor connecting commercial and industrial markets in the central United States with industrial cities in Mexico.
Canadian Pacific's latest attempt to expand its U.S. business comes after it abandoned a hostile $28.4 billion bid for Norfolk Southern Corp in April 2016. Canadian Pacific's merger negotiations with CSX Corp, which owns a large network across the eastern United States, failed in 2014.
A bid by Canadian National Railway Co, the country's biggest railroad, to buy Warren Buffett-owned Burlington Northern Santa Fe was blocked by U.S. antitrust authorities more than two decades ago.
A private equity consortium led by Blackstone Group Inc and Global Infrastructure Partners (GIP) made an unsuccessful offer to acquire Kansas City Southern last year. The sources said that bid helped revive Canadian Pacific's interest in Kansas City.
BMO Capital Markets and Goldman Sachs & Co. LLC are serving as financial advisors to Canadian Pacific, while BofA Securities and Morgan Stanley & Co. LLC are serving as financial advisors to Kansas City Southern.
<<<
$TPII still the most promising breakthrough EV and fixed-site energy storage technology around. $TPII's super-capacitor energy storage technology replaces OR supplements lithium batteries in EVs, trucks, golf carts as well as fixed-site storage facilities.
Check out their site: http://www.TriadProInc.com
$TPII Breakthrough EV-Storage-Tech in production: Replacing Lithium!
http://www.TriadProInc.com
Watch the Video: http://www.TriadProInc.com/
>>> Railroads Make Up 36.7% Of This Transportation ETF
Seeking Alpha
Oct. 09, 2020
by Sven Carlin
https://seekingalpha.com/article/4378292-railroads-make-up-36_7-of-this-transportation-etf
Summary
Railroads are good businesses with a strong moat, high profitability, good growing dividends and buybacks that push stock prices higher. It is likely railroad stocks will keep being the stable ones within the transportation ETF.
The buyback game is a risky game to play and can't be played forever. The key is to sell at some point in time before the debt becomes a burden.
At the bottom of the article you have a video discussing the topic if you prefer watching.
We all know Warren Buffett owns a railroad, Burlington Northern Santa Fe. Therefore, it is always good to look into railroad stocks to see whether a railroad stock might fit your portfolio too. A way to get exposure to railroad stocks is the iShares Transportation Average ETF (IYT) as 36.7% of its weight consists of 4 railroad stocks:
Norfolk Southern (NSC)
Union Pacific (UNP)
Kansas City Southern (KSU)
CSX Corp. (CSX)
This article will describe the investment thesis for railroad stocks, give an overview of all railroad stocks traded in the US, discuss the main trends within the sector, the valuation and the risks of investing in them.
Railroad stocks investment thesis – Moats, Growth & Profitability
The 4 key ingredients that make something a great business to own are moat, growth, increasing profitability and fair price. We analyze the moat strength of railroads, the growth opportunities, profitability and valuation.
Railroad stocks offer a moat
A railroad is a typical Buffett business. Over the last few decades the sector has consolidated and the number of railroads fell from 40 to 7. Each railroad has its own geography and nobody wants to build new railroads because that would impact the profitability of the other and your own railroad. Once you build it, you own it and you can enjoy the economic benefits of it without worrying that somebody will build a new one next to you.
It is unlikely anybody could get permission to build a big, new railroad (not in my backyard) and it is also unlikely a new railroad would ever be profitable because of the competition. Therefore, we can say railroads have a wide moat.
Railroad stocks offer growth and sustainability
When you have a moat, and a stable infrastructure, the more business you do using your infrastructure, the more money you make because your costs increase less than your revenue, thanks to the fixed cost part.
The Association of American Railroads predicts a 30% increase in U.S. freight movements by 2040. That is not much per year, but when you have a moat, when you don’t need to worry about competition too much, when you can focus on reducing costs, improving operations and increasing profitability as much as possible, it adds up to significant profitability increases.
Rail is already the most efficient way to move freight as a gallon of fuel can move a ton of freight for 470 miles on average.
The fuel efficiency makes it also environmentally positive to move things with trains.
We have discussed how railroads offer a moat and growth. But that is not enough to make them a good investment. What you need are profitability and a good price.
Precision Scheduled Railroading Increases Railroad Profitability + Scale
Since the Staggers Rail Act of 1980 that deregulated railroads, railroads spent more than $710 billion on their infrastructure. They did that because it was profitable to do so. The average railroad had returns on capital employed between 7% and 13% over the last 15 years where the returns even increased over the last decade as more and more railroads implemented Precision Scheduled Railroading.
High profitability, a moat, stable businesses, a good return on capital and a focus on rewarding shareholders have pushed railroad stocks to extremely high levels.
Railroad stocks performance and valuation
Actually, over the last 5 years, all railroad stocks have beaten the S&P 500.
Railroad stocks performance over the last 5 years
What happened happened, and there is nothing we can do about it. What we have to do is see how railroad stocks fit our portfolio now. The best way to value a business like a railroad is to look at cash flows and future growth opportunities.
I have compiled a table that compares all railroad stocks and the free cash flow yield is between 3% and 3.7% except for CSX, but that might be due to the coal exposure CSX has, thus it can be considered riskier. If you are interested in individual analyses you can find all the links below.
Railroad stocks dividends and buybacks
All railroad stocks pay a dividend but their key focus is buybacks. All listed ones take on as much debt as possible in order to do as much buybacks as possible. This is probably the reason why railroad stocks have outperformed the S&P 500.
However, as they are taking on more and more debt to do buybacks at any price, as investors we have to be careful to get out in time because when the buybacks stop and liquidity dries up, railroad stock prices will likely crash. So, enjoy the ride while it lasts and see how holding a business with a yield slightly above 3% but relatively safe fits your portfolio.
3% free cash flow yield as valuation metric
A good valuation metric for railroad stocks is also what would a railroad be worth to an owner. Recently KSU rejected a takeover bid for a free cash flow yield of 3%. Thus, we could see that as a margin of safety in this environment. Investment funds that can borrow at below 2% see railroad stocks as attractive when those offer long-term growth and a 3% cash flow yield. However, I don’t think many can come up with more than $20 billion to buy the bigger railroads, so the investment thesis with the bigger railroads is based on the cash flow yield and buyback activity.
Railroad stocks investment thesis
The investment thesis depends on what perspective you take; a relative or absolute perspective.
From an absolute investing perspective, railroads offer a 3% cash flow yield in the form of dividends and buybacks, slow growth alongside a strong moat. Nothing wrong with their businesses and it is likely in 20 years everything will look the same with improved profitability and likely even more traffic. The debt piled up might be an issue if interest rates go up, but interest rates going up is also unlikely for the short to medium term. So, we have safety and quality alongside a yield between 3% and 3.7% on average.
From a relative perspective, with your bank giving you miserable returns on savings, with investment banks and hedge funds being able to borrow at ridiculously low rates, if the market starts liking railroad stocks with a 2% free cash flow yield, that will represent a 50% upside from current levels. Plus, all the buybacks might make it much easier for railroad stocks to go up and do well. Actually, I think that until the buyback game lasts, railroad stocks will likely outperform the market.
Further, with the Fed saying it will allow inflation and railroads focusing on cost savings, their actual margins might improve especially as interest rates on debt stay low. So, railroads could be a safe bet to add portfolio protection against the loose monetary environment we will likely have the coming decade.
Railroads go for automation that lowers costs and improves safety
I hope to have given you a good perspective on railroad stocks so that you can compare them to other investment opportunities you have and see what is the best investment that will lead you to your financial goals – that is the key, nothing else matters.
Railroad stocks as part of IYT
For now, railroad stocks give the necessary stability to IYT as the dividends haven't been cut in this environment and the buybacks stay strong. However, the buyback game can only last up till a point.
One day, there will be no liquidity to take on more debt, or perhaps in a bad economy cash flows will dry up. At that moment in time, there will be no fundamentals and no buybacks to protect the stock price. That is a time to avoid being a shareholder and unfortunately an ETF cannot protect you from that. Despite having 36.7% of its weight in railroad stocks that have all outperformed the S&P 500 (SPY) over the last 5 years and decade, IYT has underperformed SPY.
The point of this article was to give you a good perspective on what you own when you own the IYT ETF, explain the risk and rewards so that you can see whether you have better options for your portfolio. Railroads contribute a 3 to 3.7% free cash flow yield and strong buybacks alongside business stability. On the risk side, all take on debt that pushes the stock higher and forces the ETF to buy more due to weight requirements. Be careful not to be on the other side of that financial engineering game.
<<<
$TPII has breakthrough energy storage technology. EV, trucks, on-site, etc.
$TPII EV Tech: Charge in Minutes / Solar Friendly:
They are in production!
Watch the Video: http://www.TriadProInc.com/
>>> Batteries Serve as 'Secret Sauce' for EVs: 4 Stocks in Focus
Yahoo Finance
by Rimmi Singhi
December 22, 2020
https://finance.yahoo.com/news/batteries-serve-secret-sauce-evs-140902027.html
Electric vehicles (EVs) are the future of transportation. For years, it seemed that Tesla TSLA was the only automaker that was playing at the forefront of the EV phenomenon and taking the concept of green vehicles seriously from a real-world functionality standpoint. However, things are changing as most of the automakers are now fast changing gears to electric. Climate concerns, stringent fuel-economy targets, and advancement in technology as well as charging infrastructure are boosting the environment-friendly EV market.
EV sales across the globe are projected to grow 50% or more in 2021 compared with ICE expected sales growth of a meager 2-5%, as predicted by analysts at Morgan Stanley, quoted in a MarketWatch article. Global EV penetration is projected to jump from 3% to 31% by 2030.
Widespread adoption of e-mobility will have a trickle-down effect in the supply chain, making battery stocks more attractive than ever. Batteries are the most common element of green cars and will play the most important role in accelerating the EV revolution. Battery specs are the cornerstone of an electric vehicle’s performance. Without the right battery technology, the EV industry wouldn’t be able to live up to its hype.
Global EV Battery Market Charged Up
The EV battery space is mostly dominated by Asia, with Contemporary Amperex Technology Co Ltd, LG Chem, BYD Co. Ltd BYDDY, Panasonic Corp. PCRFY and Samsung SDI spearheading the game. Riding on the enormous optimism in the battery space and EV frenzy, California-based EV battery maker QuantumScape QS recently made its NYSE debut. The Bill Gates-backed EV battery supplier is developing the next generation of batteries utilizing lithium metal, which has a significantly higher energy density than lithium ion. Set to disrupt the world of batteries, QuantumScape claims that its batteries are designed to offer up to 80% longer range than the existing lithium-ion batteries. Per the company, its batteries would charge up a vehicle to 80% of its full capacity in around 15 minutes.
Per ReportLinker data, the global market for EV battery is estimated at $30.7 billion in 2020 and expected to witness a CAGR of 16% over the next seven years to reach $87.2 billion. Currently, the most popular source of power in green vehicles is lithium-ion batteries. Notably, the lithium ion battery segment is likely to record a CAGR of 17.7% over the next seven years, with China, the United States of America, Europe, Japan and Canada driving global demand. Amid the upbeat scenario, investors should put battery-related stocks onto their radar.
4 ‘Pick & Shovel’ Stocks to Play the EV Boom
Panasonic Corp.: Panasonic is one of the key players in the development of next-generation lithium-ion batteries for green vehicles. Continuous research and cutting edge technology have kept the company at the forefront of battery development. Its advanced lithium-ion battery tech offers improved energy density, lower costs and improved driving range. Partnerships with auto biggies like Tesla and Toyota TM are likely to boost the firm’s prospects. Notably, the company is targeting zero cobalt in its battery cells and plans to commercialize cobalt-free batteries in a few years. Panasonic currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for its fiscal 2022 earnings indicates a year-over-year increase of 82.1%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
EnerSys ENS: Headquartered in Pennsylvania, EnerSys engages in manufacturing, marketing and distribution of various industrial batteries. Battery brands of the firm include EnergyCell, NexSys and PowerSafe. Solid product portfolio, new product offerings, acquired assets and shareholder-friendly policies are key strengths of EnerSys. Amid the changing dynamics of the industrial battery landscape, the company remains focused on the development of Thin Plate Pure Lead and advanced Lithium-ion technologies. It currently carries a Zacks Rank #3 (Hold) and has an expected EPS growth rate of 10% for the next three-five years.
Albemarle Corp. ALB: Considered as the world’s biggest lithium producer, this Charlotte-based company is expected to gain immensely from rising production of electric cars. Albemarle has battery-grade lithium-producing plants in Europe, Australia, China, Chile and the United States. This Zacks Rank #3 firm remains focused on strengthening the lithium business. Even amid the coronavirus crisis, Albemarle managed to surpass earnings and sales estimates in the last reported quarter. The company expects net sales for 2020 between $3.05 billion and $3.15 billion. Solid cost-cut initiatives and investor-friendly moves of the firm are encouraging. The company has an expected EPS growth rate of 11.9% for the next three-five years.
Vale S.A.VALE: Wondering why this Brazil-based giant miner is also on the list? Well, lithium-ion batteries mostly rely on nickel and Vale is the largest producer of the metal in the world. Most of the EV makers are aiming to eliminate the usage of cobalt in battery cells as the commodity is expensive and instead increase the nickel content. At the Battery Day event, Tesla revealed its intent to increase the nickel content in its battery composition, which would improve the range of vehicles and cut costs. So, the rising popularity of EVs is not just likely to buoy lithium demand but will also jack up nickel demand. Hence, Vale could very well be on your watchlist if you want to tap the EV boom. This Zacks Rank #3 company carries a VGM Score of A and has a long-term expected EPS growth of more than 25%.
<<<
Canadian National Railway - >>> A reliable stock for all times
https://www.fool.com/investing/2020/10/24/5-great-stocks-you-can-buy-and-hold-forever/
Canadian National Railway (NYSE:CNI) has quietly made massive profits for investors who've held the stock and reinvested dividends through the past couple of decades. The company has increased its dividend every year since 1995 at a compound annual growth rate (CAGR) of 16% through 2019.
Railroads haul one-third of U.S. exports and support nearly $220 billion in economic output each year. It's an essential industry and Canadian National's a leading player in it, operating the longest rail network in North America covering nearly 20,000 route miles, and the only one connecting the Atlantic, Pacific, and Gulf coasts.
Canadian National is also an efficient and diverse railroad, moving goods from many vital commodity markets including petroleum, grains, metals, and forest products. The company pumped a record $3.9 billion Canadian dollars into capital investments last year and is upping its automation game. For example, its Autonomous Track Inspection Program, which uses artificial intelligence to monitor and test track parameters in real time, could reduce the need for manual inspections by 50%.
Canadian National's a well-established, well-run company in a critical industry, is investing in growth, and pays one heck of a dividend. That's a great package to own for a lifetime.
<<<
Werner Enterprises - >>> 19 of the Best Stocks You've Never Heard Of
Kiplinger
by Jeff Reeves
6-23-20
https://www.kiplinger.com/slideshow/investing/t052-s001-19-of-the-best-stocks-youve-never-heard-of/index.html
Werner Enterprises
Sector: Industrials
Market value: $3.0 billion
Dividend yield: 0.8%
Werner Enterprises (WERN, $43.46) is one of the five largest freight carriers in the United States, with terminals and routes that weave across every part of the country. Even if many motorists never notice the name on the big rig beside them, Werner has likely been driving on a road near you recently as it actively operates in the 48 contiguous states and portions of Canada and Mexico.
While brick-and-mortar shopping trends have been disrupted in 2020 by coronavirus, the pandemic has also proven the power of logistics companies that power the e-commerce enterprises of the world. After all, if Werner wasn't picking up and dropping off its shipments at warehouses then that Amazon or UPS employee wouldn't have anything to package up and deliver to your front porch.
Strong fundamentals recently have also coincided with a big chance for an evolution at WERN as founder and executive chairman Clarence Werner stepped down at the end of May. The 83-year-old executive, who started the company with one truck back in 1956, surely saw success in his career. But he might not exactly be the leader shareholders were looking for in a modern era with complicated supply chains and talk of self -driving fleets.
Analysts see a lot of hope for continued growth and evolution at WERN, with increased price targets since April from a host of investment banks including Citigroup, Credit Suisse, Morgan Stanley and others.
<<<
Amazon Prime Air Seen Surging Fivefold to 200 Jets, Rivaling UPS
Bloomberg
By Spencer Soper
May 22, 2020
Kentucky air hub could emerge as key to more national service
Amazon now offers service to small a number of destinations
https://www.bloomberg.com/news/articles/2020-05-22/amazon-prime-air-will-grow-to-200-planes-rival-ups-study-says?srnd=premium
Amazon.com Inc.’s Prime Air fleet will grow to about 200 planes -- up from 42 now -- in the next seven or eight years, creating an air cargo service that could rival United Parcel Service Inc., according to a study.
“At a time when many other airlines are downsizing due to the pandemic, Amazon’s push for faster and cheaper at-home delivery is moving ahead on an ambitious timetable,” said the report issued Friday by DePaul University’s Chaddick Institute of Metropolitan Development. “Amazon Air’s robust expansion makes it one of the biggest stories in the air cargo industry in years.”
Amazon unveiled the air cargo service in 2016, prompting speculation that it would ultimately create an overnight delivery network to rival delivery partners UPS and FedEx Corp.
Prime Air operates out of smaller regional airports close to its warehouses around the country, helping Amazon quickly move inventory to accommodate one- and two-day delivery. For that reason, some analysts have dismissed Amazon as a potential competitor to UPS and FedEx since it can only offer limited service to a small number of destinations and seems designed to handle Amazon packages.
Key to its ability to take on the entrenched players, the report says, is Amazon’s new $1.5 billion facility near Cincinnati that will accommodate up to 100 planes and as many as 200 flights each day. Amazon’s lack of a central hub has kept it from competing in the overnight delivery services offered by UPS and FedEx, which have more planes flying to more destinations.
“The massive investment being made in a large hub at Cincinnati/Northern Kentucky International Airport, however, could change everything,” the report says. “This hub appears to be the linchpin to Amazon’s efforts to develop a comprehensive array of domestic delivery services.”
A separate report released Monday noted Amazon’s lack of a central hub in concluding it was not a competitive threat to FedEx, which has a hub in Memphis, or UPS, which has one in Louisville. FedEx’s network can offer 9,000 daily flight connections, UPS’ 5,500 and Amazon Air just 363, according to the report from Bernstein.
“The viability of a commercial overnight offering from Amazon remains very limited,” Bernstein analyst David Vernon wrote. “Offering a low cost on shipping to a small number of markets every so often will never be a serious competitive threat.”
<<<
Ferrari - >>> One Car Maker That Will Emerge Stronger From the Pandemic. It’s Not Who You Might Think.
Barron's
By Al Root
May 7, 2020
https://www.barrons.com/articles/the-auto-industry-is-suffering-ferrari-will-emerge-stronger-from-the-pandemic-51588850101?siteid=yhoof2&yptr=yahoo
There is one automotive company that will emerge unscathed from the coronavirus crisis—and actually come out stronger than before the outbreak. It sounds impossible, but that’s what Morgan Stanley analyst Adam Jonas believes about one of the companies he covers.
There have been some bright spots among car makers lately. General Motors stock (ticker: GM) jumped after the company reported better-than-expected first-quarter earnings Wednesday. Tesla (TSLA) has strung together a few impressive quarters, sending shares up more than 200% over the past year. But it’s neither of those.
The company in question is Ferrari (RACE). And Jonas has five reasons backing up his argument.
The Balance Sheet
Ferrari will generate positive free cash flow in 2020. Jonas models about $150 million in free cash flow, while Wall Street consensus calls for about $200 million. Mainstream auto maker Ford Motor (F), on the other hand, will burn through about $2 to $3 billion this year, according to analysts.
New Models
Ferrari is launching four models in 2020, including the SF90 Stradale, the 812 GTS, F8 Spider and the Roma grand touring model. The Roma has a V-8 engine, generating more than 600 horsepower, and the car starts at $220,000. Two more models are coming in 2021, according to Jonas. New products should help simulate new demand, regardless of the economic environment.
Formula One Racing
This benefit isn’t obvious. But some new rules for the highest level of auto racing have been pushed out until 2022, keeping costs down. That’s saving Ferrari money over the near term. The company doesn’t break out its Formula One spending in its annual report.
The Brand
“The pedigree of the Ferrari brand is more relevant than ever now,” wrote Jonas in a Wednesday research report. He sees more licensing opportunities in the future. What’s more, the company can bring a new generation of Ferrari enthusiasts into the fold by focusing on esports.
Achievable Financial Guidance
Ferrari reported quarterly numbers on May 4. It did something unique regarding guidance: It actually gave some. Most companies have withdrawn full-year 2020 guidance because Covid-19 has made the outlook too murky.
Looking ahead, the company expects to generate about $1.1 billion in Ebitda, short for earnings before interest, taxes, depreciation, and amortization. Management’s initial guidance was about $1.4 billion.
Ferrari actually missed earnings estimates when it reported on May 4, but the stock jumped 7% anyway. Weak earnings in the first and second quarter of the year aren’t a surprise. Italy, after all, is one of the countries hit hardest by the Covid-19 outbreak.
Cases in Italy topped 210,000 and deaths surpassed 29,000. The government locked down much of Northern Italy in early March, including Modena. Ferrari’s primary manufacturing location is in Maranello, Italy, just south of Modena.
Ferrari production was halted for seven weeks, and company management addressed a May restart on their quarterly conference call, stressing caution. “We now have the capacity to perform 800 voluntary blood tests a day to cover both our employees and their families,” said CEO Louis Camilleri.
In addition to all the points Jonas makes, it probably helps that Ferrari only sells about 10,000, incredibly valuable sports cars each year. Ferrari is a luxury goods company as much as it is a car maker.
So it makes sense that Ferrari trades like a luxury stock. Shares fetch about 35 times estimated 2021 earnings. GM stock, for instance, trades for 5 times estimated next year’s earnings. LVMH Moët Hennessy Louis Vuitton (MC.France), a luxury stock, trades for 23 times estimated 2021 earnings. That’s lower than Ferrari, but LVMH is buying jewelry giant Tiffany (TIF) for about 30 times 2021 earnings.
Investors, it seems, remains confident the richest consumers will keep spending.
Jonas, for his part, rates Ferrari shares the equivalent of Buy. His price target for the stock is $180, about 15% higher than recent levels.
Ferrari shares are down about 5% year to date, performing a little better than comparable drops of the Dow Jones Industrial Average and the S&P 500.
<<<
>>> French Giant Looks at Tesla With Burning Envy
Legacy carmakers won't get much help financing their climate conversion and it's going to be painful.
Bloomberg
By Chris Bryant
February 14, 2020
https://www.bloomberg.com/opinion/articles/2020-02-14/renault-can-t-expect-tesla-style-helping-hand-for-electric-push?srnd=premium
It’s going to be expensive to create an electric car market.
On one side of the Atlantic, Tesla Inc. is capitalizing on its soaring share price by selling $2 billion in stock so it can build more electric vehicles. On the other, French manufacturer Renault SA has been forced to cut its dividend by 70% and announce a big reduction in fixed costs so it can afford to do the same.
Dwindling profits and Renault’s drastic remedies were mirrored this week by its Japanese alliance partner Nissan Motor Co., as well at Daimler AG. (Renault has an engineering partnership with Daimler and owns a small stake in the German car and truck maker.) Their problems aren’t identical but all three had expanded their workforces in anticipation of demand that hasn’t materialized and now they have to tighten their belts to pay for expensive electric vehicles, for which demand remains uncertain.
Renault’s shares are near their lowest level in eight years, which means the company is capitalized at barely 10 billion euros ($11 billion), a sum that includes the 43% stake Renault owns in Nissan. Needless to say, that’s a sliver of what Tesla is worth, even though the U.S. company’s annual output is still almost a rounding error for the Renault-Nissan alliance.
This juxtaposition sends a crystal clear message: Carmakers that grew fat and happy producing combustion engine vehicles won’t get any help from the stock market now that they’ve decided to embrace an electric future. Instead the gasoline gang are going to fund these changes themselves and it’s going to be painful, for both employees and shareholders.
Long-established automakers have decided that their salvation is to be found in alliances and partnerships, which spread the cost of developing expensive technology over a greater number of car sales. It’s why Renault tried to merge with Fiat Chrysler Automobiles NV, before Peugeot-owner PSA Group beat them to it.
But in Renault’s case its links to other manufactures are amplifying its problems right now, not solving them. Relations with Nissan fell apart when former alliance boss Carlos Ghosn was arrested and remain fragile now that he’s free to settle scores. Both sides have since hired new CEOs but their shareholders aren’t yet ready to buy the story that harmony has been restored.
With its own profits slumping, Nissan can’t afford to pay big dividends to Renault and the French are also earning less from the Daimler partnership. The upshot is that Renault is a bit squeezed for cash — net cash at the automotive unit dwindled to just 1.7 billion euros at the end of December (though gross liquidity, including available credit lines, was a more respectable 16 billion euros).
One way Renault could free up some money would be to sell part of its Nissan stake, which might have the added benefit of helping to re-balance the alliance in Nissan’s favor, something the Japanese have long sought. The trouble is Nissan’s shares have halved in value over the last two years so selling now wouldn’t provide Renault with nearly as much as it once would. Interim CEO Clotilde Delbos all but ruled out such a move on Friday.
So it’s no wonder that Renault has opted to drastically scale back its own dividend and will try to cut costs by 2 billion euros in the next three years. Delbos, who’s also the chief financial officer, didn’t go into much detail about how those savings will be delivered but the company plans to review its “industrial footprint,” which suggests plant closures are a possibility. (Alliance partner Nissan has already announced 12,500 job cuts, while Daimler is targeting at least 10,000.)
Lowering costs won’t be straight forward. New Renault CEO Luca de Meo, a former Volkswagen AG executive, doesn’t start until July and French unions aren’t known for championing efforts to slash jobs. In the near term, restructuring costs will also put further pressure on Renault’s cash flow and the coronavirus could yet create unexpected problems.
But unlike at Tesla, Renault doesn’t have a queue of wealthy supporters clamoring to help fund this epochal clean-vehicle transition. One way or other, employees and existing shareholders will end up paying.
<<<
>>> Tesla Surges Past $100 Billion Market Value, Eclipsing VW
Bloomberg
By Dana Hull, Christoph Rauwald, and Gregory Calderone
January 21, 2020
https://www.bloomberg.com/news/articles/2020-01-22/tesla-hits-100-billion-mark-musk-must-sustain-for-big-payout
VW sold almost 30 times as many cars last year as Musk
CEO may be in store for $346 million award if rally sustained
Tesla Market Cap Surges Past Volkswagen's to More Than $100 Billion
Tesla Inc.’s market value has climbed above Volkswagen AG’s for the first time to more than $100 billion, a threshold that will trigger a huge payout for Elon Musk if he can sustain the feat for months.
The electric-car maker’s shares soared as much as 8.6% on Wednesday to a new intraday high of $594.50. At that price, Tesla’s market capitalization was roughly $107.2 billion, exceeding Volkswagen’s $99.4 billion and trailing only Toyota Motor Corp.
While Musk’s skeptics are dubious that Tesla should be worth more than a carmaker that sold almost 30 times as many vehicles last year, Volkswagen’s own Herbert Diess isn’t so dismissive. He’s been arguably the most vocal CEO among traditional carmakers to praise Tesla and point to its role in a radical shakeup of the more than century-old auto industry.
After saying three months ago that Tesla was no niche manufacturer anymore, Diess told top Volkswagen executives at an internal meeting in Germany last week that connected vehicles will almost double the time consumers spend online, and that cars will “become the most important mobile device.”
“If we see that, then we also understand why Tesla is so valuable from the view of analysts,” he said.
Diess, 61, is rolling out the industry’s largest electric-car fleet and aims to boost the company’s value to a level rivaling Toyota, whose $232 billion market cap is still more than Tesla and VW’s combined.
“Tesla has high innovative strength regarding battery-electric vehicles as well as connectivity, which can partly explain the high market capitalization,” Stefan Bratzel, a researcher at the Center of Automotive Management near Cologne, Germany, said in a report Wednesday. The relatively low valuation of traditional automakers is linked to uncertainty over whether they can navigate the looming industry shift, he said.
The jump above $100 billion is about more than just bragging rights for Musk, Tesla’s billionaire chief executive officer. He’s eligible to receive the first tranche of an all-or-nothing pay award if the company’s market value stays above that threshold for a sustained period. On paper, the first chunk of the award would net him about $346 million.
Tesla shares have more than doubled since the company reported a surprise third-quarter profit and told investors it was ahead of schedule bringing out its next product, the Model Y crossover, and opening its factory near Shanghai.
The stock has room to run as Tesla grows in China, Wedbush analyst Dan Ives wrote in a report Wednesday. He boosted his target price to $550 from $370 while maintaining the equivalent of a hold rating.
What Bloomberg Intelligence Says:
“Tesla’s tepid 0.3% gain in 2019 domestic unit sales suggests a tapped-out U.S. Sales in China skew the U.S. demand picture, which should become clearer by year-end with the ramp-up in Shanghai output.”
- Kevin Tynan, senior autos analyst
Gary Black, who was chief executive of Aegon Asset Management from mid 2016 through September and now holds Tesla as a private investor, said he expects Tesla to earn more than VW by 2025 and believes consensus estimates for vehicle deliveries this year are too low. He expects Musk to forecast at least 550,000 units for 2020 during next week’s earnings webcast and to tout the launch of the Model Y.
While at least eight analysts have boosted their price targets by more than $100 since the year began, consensus is still well below where Tesla’s shares are trading. The average target is $363.92 with just 10 analysts rating the stock a buy, compared with 10 holds and 16 sells.
<<<
>>> SmartETFs Launch Smart Transportation & Technology ETF ‘MOTO’
ETF Trends
by AARON NEUWIRTH
NOVEMBER 15, 2019
https://www.etftrends.com/innovative-etfs-channel/smartetfs-launch-smart-transportation-technology-etf-moto/
SmartETFs Funds launched a new, actively managed transportation and technology ETF on Friday that invests in companies believed to benefit from the current revolution in transportation.
The SmartETFs Smart Transportation & Technology ETF (MOTO) seeks long term capital appreciation from investments involved in the manufacture, development, distribution, and servicing of autonomous or electric vehicles and companies involved in related developments or technologies to support autonomous or electric vehicles including infrastructure, roadways, or other pathways.
As noted, the ETF is actively managed, as well as fully transparent, investing in approximately 35 equally weighted positions on a global basis. This includes companies that manufacture, distribute, service, offer, support, or enable the following: electric vehicles, autonomous vehicles, transportation as a service, flying autonomous vehicles, autonomous or electric public transportation, and hyperloop-based transportation, for passengers or goods.
Adapting To Tech Change
Jim Atkinson, CEO for Guinness Atkinson Asset Management, which manages SmartETFs, spoke to ETF Trends about MOTO and how it will adapt to changes in the technology sector.
The technology demands for autonomous and electric vehicles are high and the competition to win, particularly in the autonomous challenge, is fierce, Atkinson stated.
“It is very difficult to pick the winners in this competitive challenge,” he said. “We know some firms have an obvious lead, most notably Waymo and Tesla in autonomous technology and Tesla in the EV space. But how this plays out over the next decade is hard to predict.”
Atkinson added how this is one reason SmartETFs believes an actively managed strategy is preferable. Their style is low turnover, but the managers are acutely aware of these challenges and will seek to position the portfolio to take advantage of developments over time.
MOTO: A Progressive ETF
In discussing how MOTO is a progressive ETF looking at future revolution, Atkinson also noted how he believes a transportation revolution is underway.
“We’re at the beginning so it doesn’t look like much at the moment but as EVs gain market share and self-driving vehicles begin to be deployed in larger numbers our entire system of transportation may change,” he said. “The combination of electric autonomous vehicles and application-based ride-hailing may mean an end to the own and drive transportation model. The average automobile in the US is idle 95% of the time.
“A more efficient utilization means a cheaper, safer and more convenient alternative. It isn’t entirely clear where this revolution is headed but the direction of travel is for safer, cleaner, cheaper and better transportation.”
As far as where this ETF fits in a portfolio and who it’s for, Atkinson explained that MOTO is for investors who recognize the changes coming in transportation. That said, this is not a core holding and most investors that want to invest in the smart transportation revolution will likely want this as a small portion of their overall portfolio.
The SmartETFs Smart Transportation & Technology ETF (MOTO) is now available to trade on NYSE. Learn more about MOTO by visiting SmartETFs webpage.
<<<
>>> Electric Vehicles to Rev Up in 2020: Play These ETFs
Zacks
Sanghamitra Saha
January 9, 2020
https://finance.yahoo.com/news/electric-vehicles-rev-2020-play-130001956.html
With automation and technological breakthrough emerging rapidly, the fast pickup in autonomous vehicles is in the cards. Elon Musk’s Tesla TSLA’s solid growth momentum and amazing one-year stock performance supports the fact.
Electric vehicle maker Tesla's shares have surged 39.9% in the past year, breezing past the S&P 500’s 25.7% (as of Jan 7, 2019). It clearly performed better than other car makers as Ford F was up 10.5%, Honda Motors HMC and General Motors GM were almost flat and Toyota Motor TM gained 15.7%.
Tesla’s previous issues like production delays and heavy financial losses are really a matter of the past. The company delivered approximately 367,500 vehicles last year, marking a notable jump of 50% jump from 2018. The deliveries were within the range of the company’s guidance but higher than Wall Street estimates. The stock has a Zacks Rank #2 (Buy) and a Growth Score of A.
Not only Tesla, Japanese tech giant Sony has built a prototype electric car, as part of its new Vision-S initiative, which is targeted at mobility. CEO of Sony sees huge growth in the vehicles industry that are “connected, autonomous, shared and electric” and expects strong “social and environmental impacts” of this.
There is also growing enthusiasm for Tesla’s all-electric “Cybertruck,” whichis releasing in 2021 and 2022. Other electric trucks, including Rivian R1T and the electric version of Ford F-150, will also be hitting the markets soon.
Global electric vehicle sales rose to an all-time high of 1.2 million units sold between January and October 2019. It accounted for 7% of all auto sales globally. China is the market with 45% market share, followed by Europe’s 24% and the United States’ 22%.The global stock of electric passenger cars marked an increase of 63% in 2018 from the previous year, per IEA.
In the recent past, more than 10 automakers have come up with their EV plans. If these plans materialize, the sector will be able to manufacture and sell about 25 million units (of more than 400 models) by 2025, or 20% of all global cars sold, per Frost & Sullivan. General Motors, Toyota and Volvo have all fixed a target of 1 million EV sales by 2025. Plus, there are other automakers like BMW, Aston Martin and the Renault Nissan & Mitsubishi Group that are considering lucrative EV plans.
Needless to say, the enthusiasm over the EV space has prompted ETF issuers to come up with EV and battery-related funds. In past two years, there was a surge in the launches of these ETFs, with which investors can tap this accelerating industry.
Amplify Advanced Battery Metals and Materials ETF BATT
Such an uptick in the EV market should provide a boost to the battery industry as well. The fund, launched in June 2018, looks to provide exposure to lithium, cobalt, nickel, manganese and graphite via publicly-traded stocks. Companies that are in the business of mining, exploration, production, development, processing or recycling of advanced battery metals and materials, get entry to the fund. The fund charges 72 bps in fees (net).
Global X Autonomous & Electric Vehicles ETF DRIV
Launched in April 2018, the fund gives exposure to companies involved in the development of autonomous vehicle technology, electric vehicles, and its components and materials. The fund charges 68 bps in fees.
Innovation Shares NextGen Vehicles & Technology ETF EKAR
The fund debuted in February 2018. It measures the performance of a portfolio of companies that have business involvement in the development or use of or investment in New Energy Vehicles and Autonomously Driven Vehicles. The fund charges 65 bps in fees (read: An ETF to Invest in Self-driving & Electric Cars).
KraneShares Electric Vehicles and Future Mobility Index ETF KARS
Launched in January 2018, the fund follows companies engaged in the production of electric vehicles or their components or engaged in other initiatives that may change the future of mobility. The fund charges 70 bps in fees.
Global X Lithium & Battery Tech ETF LIT
The fund invests in the full lithium cycle, from mining and refining the metal, through battery production. The fund charges 75 bps in fees (see all Materials ETFs here).
<<<
>>> Moody’s downgrades Ford credit rating to junk status
CNBC
SEP 9 2019
Associated Press
https://www.cnbc.com/2019/09/09/moodys-downgrades-ford-credit-rating-to-junk-status.html
Moody’s Investors Service has downgraded Ford’s credit rating to junk status.
The service says it expects weak earnings and cash generation as Ford pursues a costly and lengthy restructuring plan.
The ratings service said Ford’s outlook remains stable, but its cash flow and profit margins are below expectations and the performance of peer companies in the auto industry
Moody’s Investors Service has downgraded Ford’s credit rating to junk status.
The service says it expects weak earnings and cash generation as Ford pursues a costly and lengthy restructuring plan.
Ford responded with a statement saying that its underlying business is strong and its balance sheet is solid.
The rating for Ford’s senior unsecured notes and its corporate family dropped to Ba1, the top rating for debt that’s not investment grade. It had been Baa3, the lowest investment grade rating.
Ford’s fight to remain an American icon
Moody’s says it expects Ford’s restructuring to extend for several years with $11 billion in charges and a $7 billion cash cost.
The ratings service said Ford’s outlook remains stable, but its cash flow and profit margins are below expectations and the performance of peer companies in the auto industry. “These measures are likely to remain weak through the 2020/2021 period including a lengthy period of negative cash flow from the restructuring programs,” Moody’s Senior Vice President of Corporate Finance Bruce Clark wrote in a note to investors Monday.
Ford’s erosion in performance happened while the global auto industry was healthy, Clark wrote. Now the company and CEO Jim Hackett must address operational problems as demand for vehicles is softening in major markets, he wrote.
The company has $23.2 billion in cash, which is more than its debt, according to Moody’s. The stable outlook reflects Moody’s expectation that the restructuring will contribute to gradual improvement in earnings, profit margins and cash generation, Clark wrote.
Ford said it has plenty of liquidity to invest in its future.
“We are making significant progress on a comprehensive global redesign — reinvigorating our product lineup and aggressively restructuring our businesses around the world,” Ford’s statement said.
The statement said Ford already is addressing operating inefficiencies and problems with its China business.
<<<
>>> Amazon Is Its Own Biggest Mailman, Shipping 3.5 Billion Parcels
Bloomberg
By Matt Day
December 19, 2019
https://www.bloomberg.com/news/articles/2019-12-19/amazon-is-its-own-biggest-mailman-delivering-3-5-billion-orders?srnd=premium
Amazon delivers “aproximately half” of global orders itself
Contractors, gig economy drivers handle most U.S. deliveries
As Amazon.com Inc. works to speed orders to customer doorsteps before Christmas, the e-commerce giant is touting an accomplishment that would have seemed absurd just a few years ago: Amazon is now its own biggest carrier.
In the U.S., delivery contractors and on-demand workers now account for a majority of deliveries to customers, an Amazon spokeswoman said. Globally, “approximately half” of Amazon deliveries are completed by Amazon Logistics, the network the company built in recent years to handle a surge in deliveries that United Parcel Service Inc., FedEx Corp. and the U.S. Postal Service were unprepared to handle.
In a press release on Thursday touting the scale of Amazon’s network, Dave Clark, the increasingly influential executive who oversees Amazon’s logistics organization, said Amazon was on pace to deliver 3.5 billion of its own packages to customers this year. That exceeded some analyst estimates. Morgan Stanley earlier this month estimated that Amazon shipped some 2.5 billion of its own packages a year.
Amazon has stocked its warehouses for decades, but once relied exclusively on the likes of UPS and FedEx to take packages from those facilities to a customer’s doorstep -- the so-called last mile. The Seattle company began to expand its capacity to move packages on its own following a disastrous 2013 holiday season, when rough weather and logistical bottlenecks led to missed deliveries and angry shoppers.
Clark says Amazon now contracts with more than 800 delivery service partners, who employ a combined 75,000 drivers in the U.S. They take packages from some 150 delivery stations located in major U.S. metropolitan areas.
That buildout has been marred by controversy, including reports of deaths and injuries as contract drivers speed through neighborhoods around the country.
Clark on Thursday was keen to tout Amazon’s safety record, saying last-mile deliveries had traveled more than 800 million miles this year and beat a safety benchmark from the National Highway Traffic Safety Administration. He didn’t provide data.
<<<
FNHI! Wow this was an old post.
FNHI has done a tremendous job turning their Story around from 2017
Since this post.
New logo and protected Brand name.
Second manufacturing plant.
Numerous Private Label partners.
Sales up 500% Q over Q.
100% Audited fins
Current and exchange upgrade to OTCQB
Float under 30mm @ .06 per share
Positive EPS
No debt
Still my biggest penny play, and my biggest frustrations.
Dual listing on the Canadian CSE still seems unattainable. The CSE is a bunch of arrogant bean counters with an OTC chip on their shoulders. FNHI has a far better chance to get a place on a Nazdaq with their revenue trend.
@.06, it’s an awesome buy and hold.
End of the Year tax loss selling g is prime to pick up a few 100k on the cheap.
Big sales new is on the event Calendar. I hope first of the year. Any news would be a waste till 2019 is behind us.
$NIO This car company could rival Tesla. The electric vehicle market has benefited from enormous state subsidies to get it off the ground. One company, Nio Inc, has received a lot of attention as a possible "Tesla rival." Scott Kennedy, senior adviser and the Freeman Chair in China Studies at the Center for Strategic and International Studies, on"Squawk Box" to explain the company and how it stacks up against Tesla and the rest of the auto industry. https://www.cnbc.com/video/2019/03/05/this-chinese-car-company-could-rival-tesla.html
Could Nio Inc. $NIO Electric Vehicles be better than Tesla Inc $TSLA ? https://articles2.marketrealist.com/2019/09/nio-better-buy-than-tesla/
>>> Amazon Cuts Off FedEx Ground for Prime Holiday Shipments
Bloomberg
By Spencer Soper and Thomas Black
December 16, 2019
https://investorshub.advfn.com/secure/post_new.aspx?board_id=25503
Move highlights e-commerce giant’s power in shipping market
Logistics expert says FedEx struggles to meet seasonal demand
Amazon.com Inc. says third-party merchants can no longer use FedEx Corp.’s ground delivery network this holiday season because it’s too slow -- highlighting the e-commerce giant’s growing power over how products get to shoppers.
Amazon sent a message to sellers Sunday night instructing them of the change, according to notifications reviewed by Bloomberg. Some Amazon sellers complained about receiving the change less than two weeks before Christmas when holiday spending is peaking. Their alternatives include United Parcel Service Inc.’s ground service.
“It’s insane for them to do this on such short notice,” said Molson Hart, whose company Viahart sells toys on Amazon. “Unless we raise prices, we’re going to lose money on every order we are forced to route away from FedEx.”
FedEx, in an emailed statement, said Amazon’s “decision affects a very small number of shippers, it limits the options for those small businesses on some of the highest demand shipping days in history and may compromise their ability to meet customer demands and manage their businesses.”
Still, logistics expert John Haber said the company has struggled to deal with seasonal demand and has been handing off some of the load to the U.S. Postal Service.
Couriers are under extra pressure because there are six fewer days this holiday shopping season, and package volume is forecast to grow.
Amazon’s ban on third-party shippers using FedEx follows a dispute between the two companies, which failed to renew a delivery contract.
“There’s a lot of bad blood between the two organizations,” said Haber, who runs Spend Management Experts, an Atlanta consulting firm. He said the feud will benefit UPS, which will have more bargaining power with Amazon.
FedEx shares fell about 1% in New York. UPS was up slightly.
More than half of all products sold on Amazon come from third-party merchants who pay Amazon commissions on each sale. Many of those merchants also pay Amazon for logistics services like warehousing and delivery, which puts Amazon in competition with FedEx. Merchants have complained to antitrust regulators that the company uses its e-commerce dominance to push them to use its logistics services.
Some merchants say that using Amazon warehouses and trucks is faster and cheaper than doing the work themselves. But Amazon increases storage fees in its warehouses during peak holiday shopping months and some merchants prefer to oversee deliveries on their own to avoid these charges.
Until now, sellers could use FedEx’s ground service during the season to meet Amazon’s pledge to deliver millions of products in one or two days. They can still use FedEx’s express service for Prime packages, but that’s a costly option.
Amazon examines its delivery providers’ performance each year to determine order cut-off times for the holidays.
<<<
>>> Copart, Inc (CPRT). provides online auctions and vehicle remarketing services. It offers a range of services for processing and selling vehicles over the Internet through its Virtual Bidding Third Generation Internet auction-style sales technology to vehicle sellers, insurance companies, banks and finance companies, charities, and fleet operators and dealers, as well as for individual owners. The company's services include online seller access, salvage estimation, estimating, end-of-life vehicle processing, virtual insured exchange, transportation, vehicle inspection stations, on-demand reporting, title processing and procurement, loan payoff, flexible vehicle processing programs, buy it now, member network, sales process, and dealer services. Its services also comprise services to sell vehicles through CashForCars.com; and U-Pull-It service that allows buyer to remove valuable parts, and sell the remaining parts and car body. The company sells its products principally to licensed vehicle dismantlers, rebuilders, repair licensees, used vehicle dealers, and exporters, as well as to the general public. As of September 4, 2019, it operated through approximately 200 locations in 11 countries. Copart, Inc. was founded in 1982 and is headquartered in Dallas, Texas. <<<
>>> NIO Is More China's WeWork Than Its Tesla Killer
This electric vehicle producer makes Elon Musk’s company look like a staid and sensible investment.
Bloomberg
By David Fickling
September 25, 2019
https://www.bloomberg.com/opinion/articles/2019-09-25/nio-is-more-china-s-wework-than-its-tesla-killer?srnd=premium
Selling cars at a loss isn't a technology innovation.
Haven’t we seen this play before?
NIO Inc., a Chinese electric-vehicle maker that was talked up as a potential Tesla Inc.-killer before its $1.15 billion initial public offering last year, is falling apart before our eyes.
The stock fell 20% in the U.S. on Tuesday after the company reported a 3.29 billion yuan ($462 million) net loss in the second quarter on a gross margin of minus 33%. Those sorts of figures make Elon Musk’s company look like a staid and sensible investment.
What’s most striking is that NIO is racking up these massive losses in spite of a business model that in theory ought to be far more efficient than conventional carmaking. In that sense, the better comparison isn’t Tesla, but WeWork – a company that pitched itself as a radically different technology play, only to be brought down to earth by the humdrum nature of operating in the real world.
One thing that makes NIO unusual is that, as my colleague Anjani Trivedi has explained, it doesn’t actually make cars. Instead it takes 45,000 yuan deposits from customers, provides a drive-train, and contracts out the rest of the build process to Anhui Jianghuai Automobile Group Corp. On top of that, it doesn’t have a dealership network, instead selling cars through an app and a web of slick WeWork-style clubs, known as NIO Houses.
Can't Be Fixed
Nio's sales as a percentage of tangible fixed assets are close to the worst in the industry -- an amazing performance for a company that doesn't own assembly plants
In principle, that could result in efficient deployment of capital, but things start to look dicey when theory comes up against the reality of NIO’s spending habits. If you compare revenue over the past year to NIO’s tangible fixed assets, it has some of the worst capital efficiency in the global car industry. For a company that doesn’t own assembly plants, that’s a heroically bad performance.
What’s going wrong? For starters, contract manufacturing isn’t as efficient as you might think. Even excluding the costs associated with recalling almost a fifth of the cars NIO has sold due to battery fires and overheating, the gross margin on vehicles was minus 4% in the second quarter.
Three Into One Won't Go
Per-vehicle costs at Nio are running at more than three times the level of revenues
Note: We've excluded "other revenue" and "other cost" as well as other smaller cost elements.
The real problems show up below the gross profit level, though. Given retail prices of around 450,000 yuan for the flagship ES8, the numbers are astonishing. Per-car R&D came to an additional 366,000 yuan; sales, general & administrative costs were 400,000 yuan on top of that. Together with its cost of sales, NIO is shelling out around 1.27 million yuan each for a vehicle that sells for barely a third as much.
If anything, that situation is likely to get worse in the months ahead. NIO’s answer to the Tesla Model 3 – a car aimed at a more mass-market audience, with a lower price that erodes what little margin its costlier predecessors could claim – went on sale in June in the form of the ES6, with prices starting at 360,000 yuan. Government subsidies that amounted to 67,500 yuan per car last year have been staged down to 11,520 yuan. The result is that an ES6 bought now is only marginally cheaper than a fancier ES8 purchased last year.
Going, Going
Nio shares have fallen by about two-thirds from the price of their initial public offering a year ago
How can NIO turn this around? R&D should be treated as a down payment on future sales, so it’s to be expected that it makes up an oversize share of costs at the startup stage. The same can’t be said of SG&A, though. You could buy a very nice car for the roughly $57,000 of overhead on each vehicle sold in the second quarter. Based on 2018’s annual results only about a fifth of that is going on marketing (another expense that might be abnormally high at the startup stage).
Eye-watering staff costs are a standout. NIO spent 4.11 billion yuan last year paying a workforce that reached 9,900 people in January. That averages out at compensation of 415,000 yuan per employee, more than three times the average white-collar salary in China’s tier-one cities. Plans to cut headcount to a target of 7,800 next week look like moving around the deckchairs on the Titanic.
NIO’s unique selling point has always been that it could provide luxury electric vehicles in China at a price well below foreign SUV competitors. The problem is, the discount doesn’t appear to come from operational efficiencies, but from losing money on every car.
The overhead is so immense that even were NIO to slash costs far more drastically than it’s anticipating and increase volumes dramatically – a bold bet, given the weakness in China’s car market and the reputational hit from its battery recall – there’s no clear path to profit. In the meantime, premium electric SUVs such as Daimler AG’s EQC and Volkswagen AG’s Audi e-tron will come to the market within months.
Like WeWork, NIO was never really the capital-efficient technology company it purported to be. Instead, it was a brief attempt to carve out a space in the middle of the market by the very old-fashioned technique of selling at a loss. The crash could now be coming sooner rather than later.
<<<
PRECISION PUSHBACK: HOW CSX IS CHANGING THE RULES OF RAILROADING
As the rail industry moves to mimic CSX’s operating model, shippers are calling foul — arguing with the company’s numbers and asking for more regulation
By Will Robinson
Reporter, Jacksonville Business Journal
Sep 17, 2019
https://www.bizjournals.com/jacksonville/news/2019/09/17/special-report-how-csx-is-changing-the-rules-of.html?ana=yahoo&yptr=yahoo
As the hours wore on, the mood in the Surface Transportation Board hearing room grew more tense.
Outside, a major storm was sweeping through the region, bringing tornado warnings that at one point shut the hearing down.
Inside, representatives from some of the largest companies in the country were bringing their own storm: So many shippers had signed up to complain about the railroad industry at the May hearing that federal regulators had to add a second day to the proceedings.
The shippers were angry — angry about?higher fines being imposed on them?by?railroads, angry about changes in the service railroads provide, angry about railroads’ refusal to share information, angry about what they see as monopolies run?amok.?
“Fundamentally, this is a situation of one dominant party that enjoys a clear monopoly over its customers, using that power position to take advantage of the customer,” said Ben Abrams, CEO of Scrap Resources Inc., a scrap recycler in Central Pennsylvania.?
Mostly, they were angry about precision scheduled railroading, the operating model brought to the United States by Jacksonville-based CSX Corp., the country’s third-largest railroad by market capitalization and by miles of track.
“There is no valuing of the customers,” said Steve DeHaan,?CEO of the International Warehouse Logistics?Association,?which?represents?360 third-party logistics providers. “It’s all about their business.”
The anger that erupted at the hearing has been simmering among shippers over the two years since CSX introduced the new model, with DeHaan?and?others throughout the industry?saying they believe rail shipping?had reached a breaking point.?
Over the course of?the?two-day hearing,?customers big and small voiced the same message: Railroads are abusing monopolistic power to drive record profits under the guise of creating operational efficiencies.?
Corporate giants like?mega-brewer?Miller-Coors and Olin Corp.,?the world’s largest chemical manufacturer, sat?alongside small businesses?like?Shea Brothers Lumber.?Trade associations representing?U.S. grain processors, paper?manufacturers, warehouse?operators, energy companies, food and beverage corporations, chemical suppliers?and more decried the behavior of America’s largest railroads.??
But the railroads, by contrast,?assured the board their service was better than ever.?Following?the?changes initiated by CSX Corp.?(Nasdaq: CSX),?the railroads had become leaner, faster and more reliable, they told the board.?
“Customers are benefiting from the best performance in CSX history,” said Arthur Adams, CSX vice president of sales.?
The hearing, convened by the regulator to examine surging?fees imposed by railroads, became a trial of precision scheduled railroading, the operating model E. Hunter Harrison brought to CSX two years ago, a model that?is sweeping the country.?
While the hearing was a public airing of shipper anger, the customers’ complaints – and their push for regulatory action – is now a constant drumbeat, expressed in private conversations and interviews with the Business Journal.
Wall Street loves the model.?Investors?have sent?CSX’s?stock price up about?160 percent over the past three years. By comparison, the Dow Jones Transportation Average, an index of 20 large transportation companies, has grown only 37 percent. The S&P 500 grew about 32 percent over that period.
But while investors cheer, customers?say railroads?are crippling their businesses.?Shippers say they?have borne the weight of reduced service days, more frequent and higher fees, increased rates, higher storage costs and higher legal fees to dispute railroad fines, all prompted by operating changes made by the railroads.?
The?railroads point to their service metrics as proof that performance has improved – but a Business Journal analysis of those metrics shows the picture they paint might not be as rosy as it appears.
At CSX,?performance?is?now measured by metrics?the company?implemented as federal regulators began monitoring?its performance. These new?metrics?differ significantly from industry standards, and customers?claim they are?disconnected from the reality they experience.?
CSX has also reformulated?how it calculates?its?operating ratio – the metric that's improvement is held up as proof the new model works. That improvement?has been helped in part by statistical changes that have gone largely unnoticed.?
As the rest of the American railroad industry — responsible for carrying millions of tons of goods, including 22 commodities, many vital to manufacturing and agriculture – races to follow CSX’s lead, shippers are pressing regulators to hit the brakes, saying the new approach is making the cost of?manufacturing and?shipping everyday goods more?expensive.?
Ray Neff, logistics manager for Lhoist America, warned regulators in a written filing that the industry’s changes, if left uncorrected, would accelerate an exodus from rail.
“My fear is that our 16-mile Industrial Spur in Tennessee will suffer the same fate (closure and abandonment) that our facilities in Florida and Texas have seen, and that Lhoist North America will eventually be forced to abandon rail,” Neff wrote.
Maverick CEO?
Former CEO E. Hunter?Harrison?was not recruited to CSX. He was installed. Already a?three-time railroad CEO and two-time Railroader of the Year, Harrison had a Steve Jobs-like following in the industry.
As creator and evangelist of precision scheduled railroading, Harrison touted the model’s ability to make railroads more efficient. It was supposed to be a win-win: Doing more with less would make the railroad more profitable, which would please investors, and better service such as more on-time trains would benefit customers.?
The model had worked?at Canadian National Railway, where?Harrison?spent seven years as CEO turning a bloated, inefficient company into one of the most efficient rail companies in North America — albeit with some customer complaints.?
He did it again at Canadian Pacific: Between 2012 and 2015,?that railroad’s revenue grew 18 percent?while earnings per share increased 133 percent and free cash flow surged to $1.155 billion – up from just $93 million in 2012. ?
Harrison had been brought to Canadian Pacific by an activist investor,?Pershing Capital,?which famously backed?Valeant Pharmaceuticals through a boom-to-bust run characterized by drug price surges.?
The private equity fund?positioned Harrison at Canadian Pacific in much the same way it positioned Valeant’s former CEO, Michael Pearson: Pushing the narrative that maverick CEOs had cracked the code to outperform?the rest of their industries. Both CEOs raised prices in areas where their companies had no competition, among other changes.
Jacksonville-based CSX would offer Harrison his biggest stage yet, and it afforded him the chance to prove skeptics wrong, something he relished. Many questioned whether precision scheduled railroading could handle the East Coast’s spaghetti-like rail network, since it had only been attempted on the straight, grid-like Canadian network.
After helping Pershing make?$2.6 billion in profit at Canadian Pacific,?Harrison left the company in January 2017. The plan: to partner with Pershing second-in-command Paul Hilal, who had left Pershing to start his own fund —?a fund formed specifically to bring Harrison to CSX.
In March 2017,?after Hilal’s fund triumphed over a reluctant CSX board, Harrison?took?the helm.?
Newly installed and dealing with health issues that would lead to his death later that year, Harrison moved quickly to make sweeping changes.?He laid off thousands of employees and contractors, shuttered railyards and sold hundreds of locomotives and railcars.?
The results five months later were dismal.?
By August 2017, the average train?spent?three more hours sitting in rail yards and?traveled?two miles per hour slower, according to data reported to the Surface Transportation Board. Only 55 percent of shipments arrived within two hours of their expected delivery. Customers called CSX’s helpline?with complaints?563 times a day, more than twice their normal rate.
The rate of train accidents rose 68 percent in the third quarter to the?railroad’s highest level in 12 years, according to data reported to the Federal Railroad Administration. On 20 occasions that quarter, CSX train accidents caused more than $100,000 in damages, the most since 2004.?
Customers were devastated by CSX’s service implosion, they told?regulators in?a 2017 hearing focused solely on CSX, sharing a range of mishaps with the board.
A Tennessee Pringles factory with 1,300 employees narrowly avoided several closures when CSX was late to deliver raw materials. Other factories, including a North Carolina Kellogg Co. factory, suspended production because of late deliveries.?Florida dairy cows?would have run out of feed if six federal and state agencies hadn’t intervened.
In one instance, CSX lost a railcar carrying chlorine, a regulated toxic substance, for three days. Shortline railroads — smaller companies that deliver shipments to the major railroads —?that relied on CSX interchanges lost as much as a quarter of their annual revenue due to CSX delays. An Amtrak passenger line running on CSX track in Indiana saw a 2,200 percent increase in CSX-caused delays.?
In testimony at the 2017 hearing, Harrison blamed his railroad’s poor performance on employees who resisted change, saying he “overlooked the people side of the ledger.” Precision scheduled railroading was not to blame, he told the regulator.
In response to customers’ complaints, the regulators began weekly monitoring calls with CSX executives.?
The same week monitoring began, CSX announced it had reinvented how it measured performance.
Redefining?performance?
In August 2017, CSX rolled out new ways of calculating standard performance indicators. The changes?— which the company touts on its website and to investors —?made the railroad’s 2017 meltdown appear less severe and its improvements more dramatic than the measures used by the rest of the industry.?
In August 2017, industry standard measurements ranked?CSX No. 6 out of?seven railroads?in how long its in-service trains?sat in railyards, a measure known as dwell time. Its trains?dwelled?for 29.3 hours?on average, by the standard calculation.?
CSX’s new formula calculates how long in-service trains sit at any point of their journey, not just in railyards. Because this methodology averages the time trains sit still over more stops, CSX’s average dwell time dropped dramatically. In the month the new methodology was introduced, trains dwelled?13.1 hours, ranking CSX No. 1.
Velocity undertook a similar transformation. In August 2017, the standard measure showed CSX’s trains going 1.9 miles per hour slower than?they did before Harrison?arrived.?CSX’s formula indicates velocity?dropped only 0.8 mph. This, too, was accomplished by including data formerly excluded, creating a larger denominator for the average.
The spread between the velocity metrics defined by CSX and the STB has narrowed, going from a 30 percent difference when introduced to about a 16 percent difference today. By coming more in line with the STB’s math, CSX has been able to show investors a 56 percent improvement in velocity since August 2017, while regulators have seen only a 36 percent improvement.
Adam Smith, CSX’s?head of operations planning, told the Business Journal?in May?that including end-to-end data in these measures?better?reflects total performance. This enables?CSX to more accurately find what needs improvement, Smith said.?For example, the new dwell metric would detect a frequent cause of delays 20 miles away from a yard, whereas the old metric would not.
The metric for cars online was also redefined in August 2017, with the company using a running average instead of a daily total. Using CSX’s formula, the number of cars online came in 33 percent less than the industry-standard equivalent, helping the railroad make the claim that it was doing more with fewer assets.
In three letters to the STB, CEO Jim Foote touted the progress CSX’s customized metrics showed. In January 2018, Foote — who took over after Harrison's death in December 2017 — noted a “remarkable rate of positive change” in dwell and velocity, then in a letter sent weeks later, he argued that because CSX’s statistical improvement was so great, “We believe we have earned the right to end STB monitoring.”
The STB disagreed, continuing to monitor CSX through March 2018.
The railroad presented its custom metrics in 30 presentations to the Surface Transportation Board from August 2017 through March 2018, and these are the only metrics it provides in quarterly earnings materials and investor conference calls. It also separately submits regulator-defined?metrics in mandatory filings to federal regulators.
The difference remains between the metrics defined by the Surface Transportation Board and those defined by CSX. CSX’s dwell, velocity and cars online are about 52 percent, 16 percent and?37?percent?apart from their?industry-standard?equivalents.
The railroad has also stopped reporting some of its long-standing measures – metrics it is not required to disclose – such as train lengths, local service measurement (the percentage of cars placed at a customer location based upon daily customer request) and right-car, right-train (percentage of cars that leave railyards according to plan).
In addition to offering investors a different sense of CSX performance, the metrics?make it harder for shippers to contest CSX fines for delays, plan capital investments, seek regulatory intervention and more, according to the American Chemistry Council,?a trade association representing most of the $526 billion?U.S.?chemical industry.??
"Railroads’ ability to change the methodology they use to calculate their performance data threatens the usefulness of that data,”?Chemistry Council attorney Jason?Tutrone?wrote in a filing submitted to regulators.?
Jim Blaze, an independent economist with decades of experience in railroading, sees the changes?as a way to?make the railroad look good, regardless of what customers are experiencing.?
“There is some gamesmanship going on,” Blaze told the Business Journal. “It’s not illegal or immoral, but?it’s harder to see if things are better or worse … .?They’re in a rush to report statistics that have a wow impact on Wall Street but no wow impact for shippers.”
Other CSX statistics have improved, shippers say, because of policy changes and data omissions.?
In Harrison’s first five months, for example, the number of customers who received the full number of cars they ordered plummeted, which led?the Surface Transportation Board?to monitor the percentage of orders CSX fulfilled.
During that monitoring period, CSX’s metrics show the fulfillment percentage improving, a sign that its network became more efficient — but customers say that was a mirage.
In 2017, a Packaging Corp. of America executive told?regulators CSX had capped how many cars his company could order at a fraction of the number it usually requested. That means order fulfillment improved?because customers could only order fewer cars, not because CSX was fulfilling more?orders, the executive explained.?
Two years later, the monitoring is no longer being done and the situation is reversed; customers told regulators in May they often are sent more cars then they need. Providing a surfeit of cars enables the railroad to charge the customers fines for keeping cars too long —?fines that now generate hundreds of millions of dollars for CSX.
CSX and other railroads have also changed the?number?of days their customers receive cars,?the number of cars in each delivery?and the time of day cars are delivered.?
“They are delivering 33 [percent] to 50 percent more cars to a yard,” Steve?DeHaan,?president of the International Warehouse Logistics Association,?said of all large railroads.?“How do you handle 50 percent more cars to your yard?”?
Customers are frequently rebuffed when they ask railroads for supplemental data, especially data customers could use to dispute fines, they told the Surface Transportation Board.
“Right?now,?it seems like all the data we have, we beg for from the railroad,”?DeHaan said.?
Redefining success?
The operational metrics aren’t the only ones that have changed. Some of the financial ones have, too.
The true sign that precision scheduled railroading works, Harrison told investors at every railroad he ran, is a drop in operating ratio.?
Operating ratio, an industry-accepted barometer of efficiency, measures how much it costs to generate?a dollar of?revenue. The lower the number,?the higher the profit.?
Jim Foote continues to hold up?operating?ratio as the single most important metric CSX reports.?
“It tells you by looking at one number whether or not you are running the company effectively and efficiently,” Foote said at an investor conference in May.?
CSX posted North America’s lowest annual operating ratio last year at 60.3 percent, a U.S. record. It also boasted?a?record?57.4?percent operating ratio ?last?quarter. Its quarterly operating ratio stood at 75.2 percent in the first quarter of 2017, the quarter before Harrison arrived.
These figures suggest that CSX has an operating profit margin of about 40 percent, and that it has improved its profit margin by 9 percentage points in just two years.?
But for CSX, this figure includes different datapoints than it did before CSX adopted the new model.
In 2017, CSX?reclassified?all real estate sales as operating income. In doing so, it eliminated a distinction between real estate with an operating impact and real estate with no operating impact – a distinction its competitors still make.?
All profits from real estate sales now?impact?operating ratio, with the profits – $236 million in the last 2.5 years – subtracted from the railroad’s expenses.?For example, CSX’s sale of the Westin Savannah Harbor Golf & Spa helped lower its operating ratio.
Without the $154 million in real estate gains last year, CSX’s operating ratio would have been 61.5, not 60.3. It would no longer have been a U.S. record.?
CSX considers the difference inconsequential. “Most Class I rails account for property sales in their operating income, including our direct peer, Norfolk Southern,” spokesperson Cindy Schild said by email. “Our reporting is very transparent, and it is easy for anyone to back out the real estate gains and get an adjusted [operating ratio].”
While Norfolk Southern does include real estate gains against expenses, it only includes income from operating properties –?the delineation CSX removed in 2017.
Blaze, the economic consultant, sees the accounting as unique.?
“It may make them look good to Wall Street, but it’s not what other railroads do,” he said.?
The methodology is also disconcerting to Chris Rooney, a former deputy administrator of the Federal Railroad Administration, since it includes unrepeatable sales of assets with no operating impact.
“While CSX is not unique in including operating real estate gains in operating earnings, it seems aggressive to remove the distinction between operating and non-operating assets,” said Rooney.
That means?CSX’s operating ratio is?improving?while CSX has assets to sell, but?it?is likely to rise once CSX becomes asset light. The railroad has sold or solicited for sale more than 1,500 miles of track.??
CSX set a target in 2018 of selling $300 million in real estate and $500 million in rail lines by the end of 2020. It has sold $562 million-worth of property over the past 2.5 years, according to its filings with the SEC.?
“There is no question these sales have?generated, and will continue to generate, sustainable income for the company,” Schild said.
CSX has also?been aggressive in selling locomotives and railcars, lowering its fleets by 12 percent and 18 percent respectively since 2017. CSX does not report how much money it has made from such sales, but Schild said the revenue from these sales is not included in operating ratio.
Railroad ripples?
The impact of the changes at CSX goes far beyond investors and customers.?
CSX moved 6.5 million units of goods last year across a 20,500-mile network that links every major metro area east of the Mississippi. Changing how it operates has ripple?effects?across that entire region.?
For example, CSX has been steadily increasing train lengths, with the length of trains growing more than 10 percent to 7,241 feet in the first five quarters in which precision scheduled railroading was implemented, between March 2017 and June 2018. Trains on some segments, such as the?Elsdon?Line between Chicago and Munster, Indiana, have grown to span more than three miles, according to CSX filings with the STB.?
CSX stopped reporting train length after the?second quarter of 2018,?but?the effect of longer trains, a practice many railroads are adopting, can be seen on the ground.?
In the Village of Evergreen Park, a Chicago suburb, trains spanning multiple miles have blocked intersections throughout the town, making school children late to class and hospital staff late to a major trauma center, residents there?have told the Surface Transportation Board. Some of the children have taken to crawling under the trains to get to school, according to Mayor James Sexton.??
“I quiver every time I see kids crawling under the train,” Sexton told the Business Journal. “It’s only a matter of time until someone is seriously hurt.”
CSX views Evergreen Park as an aberration. Shild said last month that “former issues” were due to “the complexity of Chicago” and equipment that has since been modernized.
“CSX’s goal is to serve customers reliably and minimize the impact of our operations on the surrounding community,” she said. “If we fall short of that goal, we work to understand how those situations can be improved and we coordinate closely with the city and local first responders to ensure the safety of the public while we work through such challenges.”
Evergreen Park said it has not found CSX so responsive, prompting the town to seek federal intervention, according to the town’s filings with the STB.?
“They really don’t seem to give a hoot,” Sexton said.??
Evergreen Park is not alone. In Jacksonville, for example, CSX trains were ticketed for blocking intersections 161 times in 2018 and 130 times in 2017 – up from just one ticket in 2016.?CSX has collected 30 tickets in Jacksonville so far in 2019.
No alternatives
Many of the changes?CSX made?over the past two years would have been impossible, customers told the STB in 2017 and again in 2019, if they could take their business elsewhere.?
The majority of?rail customers in the U.S. – two-thirds of rail-served chemical facilities, for example – have no alternative rail carrier, meaning their options are to ship by one railroad or to ship by truck. Trucks are expensive, given a nationwide driver shortage, and carry about a third as much as a railcar. For some materials, like hazardous chemicals, trucks are not an option.?
This gives railroads significant market power, even over corporate giants like Miller-Coors, Cargill Inc.,?Kinder Morgan?and others that testified before the?STB?in May.?
“We wouldn’t be having this conversation if shippers had other options,” testified Justin?Louchheim, director of government affairs for The Fertilizer Institute.?
That market power has allowed CSX and other railroads to increase the fees it assesses. These fees are major money makers?for CSX and railroads across the country, all of which changed their rules last year in ways that charge customers more when cars are held too long and give customers less time to return cars.??
Across the industry, fines per car per day have risen as high as $200, four times the size of the typical fine six years ago, while customers now often get half the time — just 24 hours — to unload cars, testified the International Warehouse Logistics Association's DeHaan.
“I view this as flogging the back of every American who has to pay the increased price for goods where the railroads are involved,” he said.
Railroads collected $1.2 billion from these fees last year?–?led by CSX with $371 million billed,?a 94 percent increase from 2017.?CSX led again in the first quarter of 2019 with more than $100 million billed.?It collected another $78 million in the second quarter, the second highest behind Norfolk Southern. At about 3 percent of its revenue, CSX has called such revenue insignificant.
Fees have become unavoidable because of?rule changes and?unpredictable railcar?deliveries,?customers told?the STB.?
“They created their own issues of yard congestion, and now they’ve developed a fee for it,” DeHaan said. “It’s amazing.”?
Customers told the regulators in May that they were charged fees even when railcars weren’t ready, were sent in higher numbers than requested, were improperly switched, were the wrong railcars, were late, were not delivered, were not picked up on time and were delayed because of service failures.??
Some?shippers have accused the railroads of using the fees simply as a revenue?generator.?
“Do they want the money, or do they want the improved efficiency and performance?” asked?Scrap Resources CEO?Ben Abrams. “Because it seems like they want the money.”?
The nation’s seven largest railroads, including CSX, defended the changes as an insignificant percentage of their revenues and as a means to incentivize?slow customers to move faster,?which benefits?all customers on the network.?
Surface Transportation board member Martin?Oberman?questioned the logic of this argument, noting that to avoid fees, customers would need to make major capital investments — investments that might not even be feasible.
“What we’re being told is it’s an incentive to make you move faster,” said?Oberman. “What it sounds like is it’s an incentive for you to stop using the railroad.”?
Another money maker: raising rates.? Foote has described higher prices as a virtue of the new model, since it allows railroads to compete as a premium service instead of a commodity, making them more like FedEx than the postal service. The railroad increased revenue per unit by 6 percent last year, resulting in $693 million in new revenue. CSX collected 11 percent more per unit in 2019 than it did in 2016.
Customers contend they have gotten no new value for the higher prices they’re paying.?
“The railroads are effectively doing much less and charging far more for reduced service,” Etzel testified on behalf of Kinder Morgan.??
Regulatory action?
The trail blazed by?CSX?is one?that most U.S. railroads have began to follow?– the nightmare scenario for many shippers.?
“That was the concern when CSX did it,” said the American Chemistry Council’s Scott Jensen. “Everybody worried it would be picked up by the?others.”??
Harrison brought precision scheduled railroading to Canadian National, Canadian Pacific and CSX. Norfolk Southern, Union Pacific and Kansas City Southern have all since adopted the model, leaving?Burlington Northern Santa Fe?as the only abstainer –?although perhaps not for long.?
Berkshire?Hathway?(NYSE: BRK) chairman and CEO Warren Buffett, whose firm owns BNSF, said in May he would be willing to consider some form of the operating model.?
“We?are not above copying anything that is successful, and I think there’s been a good deal that’s been learned by watching these four railroads,” Buffett said.?
Ackman’s Pershing Capital, meanwhile, bought a $688 million stake in BNSF last month.
But in May, STB board members seemed to share?customers’?view of precision scheduled railroading.?
“It has not been lost on me that the two railroads that seem to have the fewest concerns directed at them in the these two days of?hearings are BNSF, which has not adopted precision railroading, and KCS, which has just started adopting some parts of it,” said Chairwoman Ann?Begeman.?
Oberman, too, acknowledged customers’ disappointments with the operating model.? “The room is full of shippers who say PSR [precision-scheduled railroading] has made their lives worse,” he said.
The question remains: Will the regulator step in to curtail the railroads’ changes???
The board has yet to enact any concrete actions, investigations or rule changes, although?members?said in May the board?would hold meetings to determine next steps. It has not held a public meeting on the subject since May.
“Things can be better than they are,” Begeman said.?“The shippers and carriers need each other, and if we need to be the marriage counselor, we will be.”?
Customers, meanwhile, continue to leave rail.??Railroads’ monthly carloads?through May are down 4.7 percent from last year and down?12.2?percent from a decade ago, according to data from the Bureau of Transportation Statistics?—?despite the fact that?trucking is more expensive.?
CSX, however, says it is gaining in market share. Wolfe Research asked shippers this summer which rail carriers would it increase volumes with and which would it decrease volumes with, and CSX netted a 60 percent gain among respondents, while its East Coast rival Norfolk Southern netted a 33 percent loss.
Customers also gave CSX performance a higher rating in the second quarter, 64 percent, than the same quarter a year ago, 49 percent, according to a Cowen Equity Research report.
While CSX has?blamed the overall economy for a recent?drop in?carloads and revenue — with Foote calling?the “present economic backdrop one of the most puzzling I have experienced in my career” —?analysts had expected the railroad’s efficiency gains to bolster the bottom line for at least a few more quarters.
Customers, by contrast, say the changes are driving shippers away.?For Ray Neff, logistics manager for?Lhoist?North America,?the exodus was enough to prompt him?to?contemplate?the end of U.S. freight rail.??
"These charges are accelerating the demise of rail shipments at an alarming rate,” Neff wrote in an STB filing.?“Once it is gone, it is gone."
<<<
>>> Atlas Air Worldwide Holdings, Inc. (AAWW), through its subsidiaries, provides outsourced aircraft and aviation operating services. It operates through three segments: ACMI, Charter, and Dry Leasing. The company offers outsourced cargo and passenger aircraft operating solutions, including contractual service arrangements, such as the provision of aircraft; and value-added services, including crew, maintenance, and insurance to aircraft and other customers. It also provides cargo and passenger aircraft charter services to the U.S. Military Air Mobility Command, charter brokers, freight forwarders, direct shippers, airlines, sports teams and fans, and private charter customers; and aircraft and engines dry leasing services. In addition, the company offers administrative and management support services, and flight simulator training services. It also serves express delivery providers, e-commerce retailers, and airlines. The company has operations in Africa, Asia, Australia, Europe, the Middle East, North America, and South America. Atlas Air Worldwide Holdings, Inc. was founded in 1992 and is headquartered in Purchase, New York.
<<<
>>> Air Transport Services Group, Inc. (ATSG), through its subsidiaries, operates in the airfreight and logistics industry. The company owns and leases cargo aircraft to airlines and other customers. It also provides airline operations to delivery companies, airlines, freight forwarders, and the U.S. Military, as well as operates charter agreements. In addition, the company offers mail and package sorting services, as well as related maintenance services for material handling equipment, ground equipment, and facilities; airframe modification and maintenance, component repair, engineering, aircraft line maintenance, and insurance services; and flight crew training, load transfer and sorting services. Further, it rents ground equipment and sells aviation fuel; and resells and brokers aircraft parts. As of December 31, 2018, the company owned a fleet of 91 serviceable Boeing 777,767, 757, and 737 passenger and cargo aircraft. The company, formerly known as ABX Holdings, Inc., was founded in 1980 and is headquartered in Wilmington, Ohio.
<<<
>>> FedEx Trims Amazon Ties as Retailer Flexes Delivery Muscles
Bloomberg
By Mary Schlangenstein and Spencer Soper
June 7, 2019
https://www.bloomberg.com/news/articles/2019-06-07/fedex-says-it-won-t-renew-amazon-s-u-s-air-delivery-contracts?srnd=premium
Courier says it won’t renew contract for U.S. air services
Focus will be on other customers such as Walmart, Target
FedEx Corp. said it wouldn’t renew its U.S. air-delivery contract with Amazon.com Inc., paring a key customer relationship as the largest online retailer deepens its foray into freight transportation.
The new focus will be on “serving the broader e-commerce market,” with U.S. package volume from online shopping expected to double by 2026, FedEx said in a statement Friday. The Amazon contract with the Express air division expires at the end of this month, and doesn’t cover international operations or other services such as FedEx’s ground deliveries.
FedEx’s surprise move signals that the No. 2 U.S. courier will bank on e-commerce customers that lack Amazon’s bargaining power for big volume discounts. Amazon’s emergence as a logistics powerhouse is piling pressure on FedEx and United Parcel Service Inc. for cheaper and speedier deliveries, as the e-commerce leader builds its own aircraft fleet and delivery capabilities.
Friday's announcement sapped some of FedEx's gain for the day
“FedEx is ripping the Band-Aid off,” said Kevin Sterling, a Seaport Global Holdings analyst. “You could see the Express business eventually fading out and FedEx made the decision to go ahead and exit that side of the business with Amazon.”
The shares rose 1% to $158.48 at 3 p.m. in New York. FedEx erased gains on the company’s announcement about Amazon before recovering some of the lost ground. Amazon held steady, trading 2.6% higher at $1,799.72.
“We respect FedEx’s decision and thank them for their role serving Amazon customers over the years,” the Seattle-based retailer said in a statement.
Shrinking Business
FedEx said Amazon isn’t its largest customer, representing 1.3% of sales last year. Shipping consultant Satish Jindel estimated that FedEx’s domestic air-parcel business with Amazon is probably “a few hundred million a year, at the best,” and poised to decline.
“They know their Amazon business is going to continue to shrink,” said Jindel, founder of SJ Consulting Group, referring to FedEx. “Why have your capacity be used up by a customer that’s going to continue to chip away? They’d rather use that capacity for other customers.”
FedEx said it would focus on customers such as Walmart Inc., Target Corp. and Walgreens Boots Alliance Inc.
“There is significant demand and opportunity for growth in e-commerce, which is expected to grow from 50 million to 100 million packages a day in the U.S. by 2026,” the Memphis, Tennessee-based courier said in the statement. “FedEx has already built out the network and capacity to serve thousands of retailers in the e-commerce space.”
Cautionary Tale
XPO Logistics Inc., another transportation provider, had to cut its 2019 profit forecast after Amazon abruptly took away business in December. That left XPO with $600 million in lost sales.
“FedEx didn’t want to be caught off guard and come in one morning to Amazon saying we’re no longer doing express business with you,” Seaport’s Sterling said.
Amazon has been beefing up its own freight-hauling ability for several years. In 2013, an internal report proposed an aggressive global expansion of the Fulfillment By Amazon service, which provides storage, packing and shipping for independent merchants selling products on the company’s website.
Amazon Encroachment
Three years ago, the online retailer struck deals with air-freight companies Atlas Air Worldwide Holdings Inc. and Air Transport Services Group Inc. to bolster the fleet of cargo planes dedicated to hauling Amazon packages.
Atlas Air and Air Transport operated a combined 40 air freighters for Amazon at the end of 2018, with agreements to add more over the next two years. In both cases, Amazon holds warrants that allow it to acquire increasing stakes in the air cargo carriers as its aircraft commitments grow.
Amazon had already been reducing its business with FedEx Express over the past 14 months, said Lee Klaskow, an analyst at Bloomberg Intelligence. Dropping Amazon will allow FedEx to carry “more desirable freight” than Amazon’s business from a profitability standpoint.
“This is just a fact of Amazon using less of FedEx over the last year or so given that they’re building out their own air fleet, combined with the fact their volume probably didn’t warrant the kind of discounts they were getting,” Klaskow said. “FedEx would like to grow with a long-term partner versus somebody who is taking transportation functions in-house.”
<<<
>>> China Targets FedEx in ‘Warning’ to U.S.
Bloomberg
By Tony Czuczka
June 1, 2019
https://www.bloomberg.com/news/articles/2019-06-01/china-launches-investigation-into-fedex-xinhua?srnd=premium
Beijing officials to present stance toward Trump on Sunday
Probe into why U.S. shipper failed to deliver parcels properly
China targeted FedEx Corp. in its escalating trade war with the U.S., giving a hint of which foreign companies it may blacklist as “unreliable.”
With Chinese officials due to announce their position on trade talks with the U.S. on Sunday, the investigation into FedEx’s “wrongful delivery of packages” was framed as a warning by Beijing after the Trump administration imposed a ban on business with telecom giant Huawei Technologies Co.
The latest salvo signals there’s no detente in sight in the struggle between the world’s two biggest economies at a time when trade talks have broken down. Chinese retaliatory tariffs on U.S. imports kicked in Saturday in Beijing, affecting more than 2,400 goods that face levies of as much as 25% compared with 10% previously.
FedEx apologized this week for delivery errors on Huawei packages following reports that parcels were returned to senders, and China’s biggest tech company said it’s reviewing its relationship with the U.S. delivery service. Two packages containing documents being shipped to the company in China from Japan were diverted to the U.S. without authorization, Reuters reported.
Read more: China Threatens Sweeping Blacklist of Firms After Huawei Ban
China opened a probe because FedEx violated Chinese laws and regulations and harmed customers by misdirecting packages, the state-run Xinhua News Agency said Saturday.
‘A Warning’
“Now that China has established a list of unreliable entities, the investigation into FedEx will be a warning to other foreign companies and individuals that violate Chinese laws and regulations,” China Central Television said in a commentary.
FedEx said it values its business in China and its relationship with Chinese clients, including Huawei. “FedEx will fully cooperate with any regulatory investigation into how we serve our customers,” the company said in a statement Saturday.
China said Friday it will draw up a list of “unreliable entities” that harm the interests of Chinese companies. That opens the door to targeting a broad swathe of the global tech industry, from U.S. giants like Alphabet Inc.’s Google, Qualcomm Inc. and Intel Corp. to non-American suppliers that have cut off Huawei, such as Toshiba and Arm.
China will publish a white paper on its position on trade talks with the U.S. on Sunday in Beijing. The document will be released at 10 a.m. on Sunday, and Vice Commerce Minister Wang Shouwen will take questions, according to an official statement.
Markets Rattled
Trade tensions are spilling ever wider, raising concern about the impact on the global economy. Bloomberg reported on Friday that China has a plan to restrict exports of rare earths to the U.S. if it needs to. On another front, President Donald Trump said he plans to impose a 5% U.S. tariff on all Mexican goods over illegal immigration.
Read more: China Has Rare Earths Plan Ready to Go If Trade War Deepens
With markets roiled by the threats and rhetoric on trade, the S&P 500 had its worst month of May in seven years. Investors are now looking to a meeting between U.S. President Donald Trump and Chinese President Xi Jinping at the end of the month at the Group of 20 Summit in Osaka for a possible rapprochement and easing of trade tensions.
Trump may ask Treasury Secretary Steven Mnuchin to meet with Chinese officials while in Japan next week amid an escalating trade dispute between the two countries, White House senior adviser Kellyanne Conway said.
<<<
>>> Google drone deliveries cleared for take-off in Australia
MSN
4-9-19
https://www.msn.com/en-us/travel/news/google-drone-deliveries-cleared-for-take-off-in-australia/ar-BBVKymL?OCID=ansmsnnews11#page=2
A Google-linked firm will start delivering takeaways and other small items to Canberra residents after the company received approval from aviation watchdogs in Australia on Tuesday.
Drone company "Wing" -- an offshoot of Google's parent company Alphabet -- has been trialling deliveries for the last 18 months, but will now be able to go ahead full time.
"We have approved Wing Aviation Pty Ltd to operate ongoing delivery drone operations in North Canberra," the Civil Aviation Safety Authority said on Tuesday.
The company said it had been delivering "food and drinks, over-the-counter chemist items, and locally-made coffee and chocolate".
About 3,000 deliveries were made, allowing regulators to judge the project was safe, leading to the first commercial approval in Australia and one of the first anywhere in the world.
Winged drones will only be allowed to fly 11-12 hours a day and they must be piloted, rather than fully automated.
The initial area of operations is only about 100 homes, but that is expected to expand quickly.
The regulator did not look at the noise or privacy impact of the project -- two issues that emerged during trials.
Wing argues that drone deliveries reduce traffic and pollution and are quick -- being completed in six-10 minutes.
A customer uses an app to order the product, which is loaded onto a drone.
The drone hovers above its destination, lowering the goods down on a winch-like cable before flying away.
In the United States UPS last month launched that country's first authorised use of unmanned drones to transport packages to recipients.
<<<
>>> Astro Aerospace Ltd. (ASDN) and its subsidiaries develop selfpiloted and autonomous, manned and unmanned, electric vertical take off and landing aerial vehicles. The company intends to provide the market with aerial transportation for humans and cargo. The company was formerly known as CPSM, Inc. and changed its name to Astro Aerospace Ltd. in March 2018. Astro Aerospace Ltd. is headquartered in Lewisville, Texas. <<<
>>> Warren Buffett was right to buy NetJets
by Brian Sozzi
Yahoo Finance
March 30, 2019
https://finance.yahoo.com/news/warren-buffett-was-right-to-buy-net-jets-132829722.html
Let’s be real here: Warren Buffett’s purchase of NetJets has likely paid off handsomely.
The “Oracle of Omaha” plunked down a cool $725 million to buy then struggling executive jet player NetJets in 1998. Since then, NetJets has morphed into the unquestioned leader in the fractional jet marketplace. In part that’s due to Buffett’s mind-blowing $18 billion investment in the company in 2012, mostly allowing it to buy a host of new planes. Other companies in the space have’t been able to keep pace with that type of capital investment.
And indeed NetJets has delivered on the front of putting Buffett’s cash to work.
NetJets now has 750 aircraft in operation (it had 130 at the time of Buffett’s acquisition) that whisk executives to various meetings throughout the day, of course offering a car right on the tarmac to shuttle them around town. A NetJets spokeswoman told Yahoo Finance the company has firm orders in place for about 80 plane deliveries in 2019 and 2020.
But since Buffett’s big buy, NetJets has also morphed into the mode of transport for celebrities and influencers that can’t help but to post photos of their experience on Instagram. The combination of healthy corporate and influencer markets has NetJets on track to achieve solid growth in 2019, despite a fractional share setting someone back north of $150,000.
The NetJets spokeswoman said the business will see 5%-6% growth in 2019. It’s reportedly profitable. Not too shabby compared to commercial airlines such as SouthWest Airlines warning about current demand trends.
Buffett is a frequent NetJets user, the company’s president of sales and marketing Patrick Gallagher told Yahoo Finance. One reason why you ask (besides the fact he owns it)? NetJets flies without a number on the tail, meaning dealmakers such as Buffett can travel undetected.
Because hey, the eyes are always on where the players such as Buffett are traveling to.
<<<
>>> Boeing is haunted by a 50-year-old feature of 737 jets
By Ralph Vartabedian
Los Angeles Times
3-15-19
https://www.msn.com/en-us/travel/news/boeing-is-haunted-by-a-50-year-old-feature-of-737-jets/ar-BBUOl5M?li=BBnb7Kz&ocid=mailsignout#page=2
Sully blasts 'absurd' lack of training after crash
A set of stairs may have never caused so much trouble in an aircraft.
First introduced in West Germany as a short-hop commuter jet in the early Cold War, the Boeing 737-100 had folding metal stairs attached to the fuselage that passengers climbed to board before airports had jetways. Ground crews hand-lifted heavy luggage into the cargo holds in those days, long before motorized belt loaders were widely available.
That low-to-the-ground design was a plus in 1968, but it has proved to be a constraint that engineers modernizing the 737 have had to work around ever since. The compromises required to push forward a more fuel-efficient version of the plane - with larger engines and altered aerodynamics - led to the complex flight control software system that is now under investigation in two fatal crashes over the last five months.
Boeing's problems deepened Thursday, when the company announced it was stopping delivery of the aircraft after the Federal Aviation Administration's decision Wednesday to ground the aircraft.
"We continue to build 737 Max airplanes, while assessing how the situation, including potential capacity constraints, will impact our production system," the Chicago company said in a statement.
The crisis comes after 50 years of remarkable success in making the 737 a profitable workhorse. Today, the aerospace giant has a massive backlog of more than 4,700 orders for the jetliner and its sales account for nearly a third of Boeing's profit.
But the decision to continue modernizing the jet, rather than starting at some point with a clean design, resulted in engineering challenges that created unforeseen risks.
"Boeing has to sit down and ask itself how long they can keep updating this airplane," said Douglas Moss, an instructor at the University of Southern California's Viterbi Aviation Safety and Security Program, a former United Airlines captain, an attorney and a former Air Force test pilot. "We are getting to the point where legacy features are such a drag on the airplane that we have to go to a clean-sheet airplane."
Few, if any, complex products designed in the 1960s are still manufactured today. The IBM 360 mainframe computer was put out to pasture decades ago. The Apollo spacecraft is revered history. The Buick Electra 225 is long gone. And Western Electric dial telephones are seen only in classic movies.
Today's 737 is a substantially different system from the original. Boeing strengthened its wings, developed new assembly technologies and put in modern cockpit electronics. The changes allowed the 737 to outlive both the Boeing 757 and 767, which were developed decades later and then retired.
Over the years, the FAA has implemented new and tougher design requirements, but a derivative gets many of the designs grandfathered in, Moss said.
"It is cheaper and easier to do a derivative than a new aircraft," said Robert Ditchey, an engineer, aviation safety consultant and founder of America West Airlines, which purchased some of the early 737 models. "It is easier to certificate it."
But some aspects of the legacy 737 design are vintage headaches, such as the ground clearance designed to allow a staircase that's now obsolete. "They wanted it close to the ground for boarding," Ditchey said.
Andrew Skow, founder of Tiger Century Aircraft, which develops cockpit safety systems, and a former Northrop Grumman chief engineer, said Boeing has had a good record modernizing the 737. But he said, "They may have pushed it too far."
To handle a longer fuselage and more passengers, Boeing added larger, more powerful engines, but that required it to reposition them to maintain ground clearance. As a result, the 737 can pitch up under certain circumstances. Software, known as the Maneuvering Characteristics Augmentation System, was added to counteract that tendency.
It was that software that is believed to have been involved in a Lion Air crash in Indonesia in October.
The software erroneously thought the aircraft was at risk of losing lift and stalling - because of a malfunctioning sensor - and ordered the stabilizer at the rear to put it into a series of sharp dives that ultimately caused the plane to crash into the Java Sea.
What happened on the Ethiopian Airlines flight is less clear, but tracking data show that it also encountered sharp changes in its vertical velocity and at one point in its climb after takeoff lost 400 feet of altitude. The FAA grounded the jetliner Wednesday, saying that new satellite data showed the Ethiopian Airlines flight dynamics were "very close" to those of the Lion Air jet.
Ethiopia sent "black box" recording devices recovered from the crashed jet to France for analysis, after refusing to hand them over to U.S. authorities. The U.S. National Transportation Safety Board still plans to send investigators to France to help its Bureau of Inquiry and Analysis for Civil Aviation Safety.
Airline crashes seldom are caused by a single factor, and the two 737 accidents may yet involve poor maintenance, pilot errors and inadequate training. But it appears increasingly likely that Boeing's software system and the company's lack of recommendations for pilot training on it may have played an important role in the mishaps.
The entire need for the software system is fundamental to the jet's history.
The bottom of the 737's engines are a minimum of 17 inches above the runway. By comparison, the Boeing 757 has a minimum clearance of 29 inches, according to Boeing specification books. The newer 787 Dreamliner has 28 inches or 29 inches, depending on the engine.
The 737 originally was equipped with the Pratt & Whitney JT-8 series jets, which had an inner fan diameter of 49.2 inches. "They looked like cigars, long and skinny," Moss said.
By comparison, the LEAP-1b engines on the Max 8 have a diameter of 69 inches, nearly 20 inches more than the original. There wouldn't be enough clearance without some kind of modification.
In the 737-300, which came after the original planes sold in West Germany, Boeing came up with an unusual fix: It created a flat bottom on the nacelle (the shroud around the fan), creating what pilots came to call the "hamster pouch."
"They made it work," said Ditchey, whose America West was one of the original customers of the 737-300.
But the LEAP engines required an even bigger change. Boeing redesigned the pylons, the structure that holds the engine to the wing, extending them farther forward and higher up. It gave the needed 17 inches of clearance. The company also put in a higher nose landing gear.
The change, however, affected the plane's aerodynamics. Boeing discovered the new position of the engines increased the lift of the aircraft, creating a tendency for the nose to pitch up.
The solution was MCAS, which ordered the stabilizer to push down the nose if the "angle of attack" - or angle that air flows over the wings - got too high. The MCAS depends on data from two sensors. But on the Lion Air flight, the MCAS relied on a sensor that was erroneously reporting a high angle of attack when the plane was nowhere near a stall.
The pilots tried to counteract the nose-down movements by pulling back on the yoke. But even pulling with all their might they could not counteract the forces, according to data in a preliminary accident investigation report.
Skow criticized MCAS, saying it acted only on the basis of angle of attack. The Lion Air jet was traveling so fast that when MCAS ordered the stabilizer to pitch the nose down it was a violent reaction. The software should have factored in air speed, he said, which would have better calibrated the pilots' reaction.
Skow's firm has developed a cockpit display system that he says would have identified the failure of the angle of attack sensor and allowed the crew to abort the takeoff. "We believe we could have prevented the accident," he said.
If the results of the investigation do not undermine the fundamental design of the aircraft, then the 737 Max's future may not be in peril, aviation experts said. It may turn out all that's needed is a software fix or additional pilot training.
The 737 has survived other crises. In a 1988 accident on a flight between Honolulu and Hilo, the entire top of the plane came off in an explosive decompression. A flight attendant was sucked out and 65 passengers and crew were injured. It was blamed on faulty lap joints in the aluminum skin of the fuselage, which Boeing reengineered.
"The 737 is the most successful commercial jet ever produced," said John Cox, an air safety expert and veteran pilot, adding that commonality among its models helps airlines with pilot training. "It is nearing the end of its production life. The technology will eventually drive Boeing to a replacement."
<<<
>>> FedEx to take up to $575 million charge as it starts voluntary buyouts
October 24, 2018
REUTERS
Mike Blake
https://www.reuters.com/article/us-fedex-layoffs/fedex-to-take-up-to-575-million-charge-as-it-starts-voluntary-buyouts-idUSKCN1PC2LU
(Reuters) - FedEx Corp (FDX.N) said on Friday it could take as much as $575 million in charges as it began offering voluntary cash buyouts to certain U.S-based employees in a bid to reduce costs.
The parcel company announced in December that it would be offering voluntary buyouts to ease pressure on profits that have been hit by troubles in its express delivery unit and the integration of European company TNT.
FedEx had said that the vast majority of its buyout offers would be made to workers at the FedEx Express unit, which has 227,000 employees, and at FedEx Services, which employs 30,000 people.
The company also slashed its 2019 forecast that month blaming a weakening European economy and U.S. trade tensions that exacerbated a slowdown in China.
The Memphis, Tennessee-based company said on Friday it expects to incur charges of between $450 million and $575 million related to the buyout program predominantly in the fourth quarter of fiscal 2019.
It expects employees to vacate their positions by the end of fiscal 2019 and the program to save it between $225 million to $275 million annually beginning in fiscal 2020.
FedEx did not announce how many jobs it seeks to cut, but has said previously that it would extend similar voluntary buyouts to international workers too.
FedEx employs more than 450,000 people around the world, according to its latest annual filing. The company’s shares closed up 2 percent on Friday and were unchanged in after hours trading.
<<<
Geely, China's most successful carmaker, sold 20 percent more cars in 2018, but this was sharply lower than a 63 percent growth in 2017. It is forecasting flat sales this year. Japan's Toyota Motor, however, bucked the trend, with a 14.3 percent rise in sales in China, versus 6 percent growth in 2017, helped by better demand for its luxury brand Lexus and improved marketing efforts.
https://auto.ndtv.com/news/china-car-sales-hit-reverse-for-the-first-time-since-1990s-1977464
>>> Automakers rise on report of China moving to cut U.S. car tariffs
Reuters
12-11-18
https://www.reuters.com/article/us-usa-trade-china-autos-idUSKBN1OA1AC
(Reuters) - Automakers’ shares rose on Tuesday following a report that China could move to cut tariffs on American-made cars, a step which was forecast by U.S. President Donald Trump after a meeting with China’s president in Argentina.
A worker inspects imported cars at a port in Qingdao, Shandong province, China May 23, 2018. REUTERS/Stringer
China is moving to cut import tariffs on American-made cars to 15 percent from the current 40 percent, Bloomberg reported on Tuesday citing people familiar with the matter.
The step hasn’t been finalized and could still change, according to the report.
Shares of U.S. automakers including General Motors Co (GM.N) and Ford Motor Co (F.N) rose about 2 percent in premarket trading on hopes that the move could revitalize sales that took a hit when China ramped up levies on U.S.-made cars.
European auto stocks .SXAP also rallied 2.8 pct on the news, as several of the carmakers build SUVs in the United States and sell in China.
BMW (BMWG.DE), Volkswagen AG (VOWG_p.DE) and Daimler AG (BMWG.DE) rose between 2.3 percent and 4 percent.
A proposal to reduce tariffs on cars made in the U.S. to 15 percent has been submitted to China’s Cabinet to be reviewed in the coming days, according to the report.
Stock selloff snowballs on fresh fears for world growth
Beijing had raised tariffs on U.S. auto imports to 40 percent in July, forcing many carmakers to hike prices.
The news would also be beneficial for Tesla Inc (TSLA.O) that has been hit hard by increased tariffs on the electric cars it exports to China.
The U.S. firm, led by billionaire Elon Musk, has said it will cut prices to make its cars “more affordable” and absorb more of the hit from the tariffs. Tesla is also building a local plant in Shanghai to help it avoid steep tariffs.
“China has agreed to reduce and remove tariffs on cars coming into China from the U.S. Currently the tariff is 40%,” Trump had tweeted last week.
>>>
Name | Symbol | % Assets |
---|---|---|
Tesla Inc | TSLA | 3.30% |
Skyworks Solutions Inc | SWKS | 3.25% |
Ansys Inc | ANSS | 3.09% |
NVIDIA Corp | NVDA | 3.07% |
ON Semiconductor Corp | ON | 3.07% |
Lear Corp | LEA | 3.02% |
Tianneng Power International Ltd | 00819 | 3.01% |
Taiwan Semiconductor Manufacturing Co Ltd ADR | TSM.TW | 2.98% |
Autohome Inc ADR | ATHM | 2.94% |
Volvo AB B | VOLV B | 2.92% |
Apple Inc | AAPL | 3.59% |
NVIDIA Corp | NVDA | 3.57% |
Intel Corp | INTC | 3.35% |
Alphabet Inc A | GOOGL | 3.26% |
Samsung Electronics Co Ltd | 005930.KS | 3.26% |
Toyota Motor Corp | 7203 | 3.22% |
Microsoft Corp | MSFT | 3.06% |
Qualcomm Inc | QCOM | 3.03% |
Cisco Systems Inc | CSCO | 2.43% |
Daimler AG | DAI.DE | 2.08% |
Volume | |
Day Range: | |
Bid Price | |
Ask Price | |
Last Trade Time: |