6 February 2024Rail carloads - The Class 1 Rails reported last week's volumes yesterday. In general, the numbers looked a lot better following the weather-induced weakness in January. NSC volumes were up 2% sequentially and up 9% year over year - to just over 138,000. CSX was up 5% sequentially and up 11% year over year; UNP was up 8% sequentially and up 6% year over year (160,000). CNI was up 5% sequentially and up 3% year over year and CP was up 7% both sequentially and year over year. We need to see more progress to climb out of the hole that was created in January, but it's encouraging to see this recovery and we expect more progress as we head towards the start of seasonal strength in March and beyond.Truck rates - The dry van market demand index was down 19% sequentially last week following a 6% downtick the prior week, as reported by FTR Truckstop yesterday. This decline was likely due to capacity freeing up after the increment January weather. The index is still up 12% from the end of last year, up 7% year over year, and up 44% from last year's lowest stretch from mid-April to mid-May. Rates are still soft, with the dry van spot rate down 2% last week and down 4% from the end of last year.Diesel - The national price of diesel averaged $3.90 last week, up 3c sequentially, according to the EIA yesterday. It is down 16% from the recent peak reached mid-September but still at what we'd call elevated levels. This is a positive for LTL and Parcel companies with their fuel surcharges based on a percentage over a base rate. Higher fuel prices are also accretive to Railroad operating income, though dilutive to operating margin.Amit MehrotraResearch Analyst+1-212-250-2076Ben MohrResearch Analyst+1-212-250-1708Chris RobertsonResearch Analyst+1-212-250-9995Deutsche Bank Securities Inc.IMPORTANT RESEARCH DISCLOSURES AND ANALYST CERTIFICATIONS LOCATED IN APPENDIX 1. Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. MCI (P) 041/10/2023. Deutsche BankResearch North America Canada United States Industrials Air Freight & Logistics Industry Early Morning Haul Date Industry Update Rail carloads, Truck rates, DieselDistributed on: 06/02/2024 11:44:10 GMT7T2se3r0Ot6kwoPa6 February 2024Early Morning HaulPage 2Deutsche Bank Securities Inc.Appendix 1Analyst CertificationThe views expressed in this report accurately reflect the personal views of the undersigned lead analyst about the subject issuers and the securities of those issuers. In addition, the undersigned lead analyst has not and will not receive any compensation for providing a specific recommendation or view in this...
