Airline Revenues Are Soaring. Their Profits Are Not | Planes And Trains Expert Jay Shabat on Depressed Railroad Volumes And Global Air Traffic
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Jack: Forward guidance is brought to you by Van Eck, a global leader in asset management since 1955. You'll be hearing more about a Van Eck ETF later on. But for now, let's get into today's interview. Interview. Very pleased to welcome back to forward guidance Jay Shabbat, an analyst with Skift Airline Weekly and Publisher of the Railroad Weekly Sub Stack.
As the introductions might suggest, Jay is an expert in all things trains and planes, and that is what we're gonna be discussing today. Jay, great to see you. How are you doing?
Jay: Oh, I'm good, Jack. How are you? Thanks for having me on.
Jack: Great to see you again, Jay. Let's start with trains because trains are often seen railroads as a indicator of the lifeblood of the American manufacturing economy. So broadly speaking, in terms of volumes, in terms of pricing, what are you seeing in the American railroad sphere? And when I say railroads, we are not talking about consumer railroads. Mostly, it is freight.
So containers mainly, you know, referenced by professionals such as yourself as intermodal, but then also things like coal, chemicals, and the like. What are you seeing in terms of demand in terms of volumes? And what might that suggest about the health of the American manufacturing economy?
Jay: Yeah. Good question. Jack. So I'll start by saying that yes, we are just focusing here on the freight railroads within North America And we could you asked about the US. We'll we'll talk about the US.
I do cover Canada and Mexico as well, so all of North America. Really, you can think of it. There are 6 big railroads in North America. There's 2 in the Western US, 2 in the Eastern US, 2 in Canada. So those are your 6 and then there's another big 1 in Mexico, 1 of the Canadian airlines, railroads owns a big railroad in Mexico.
So that's just the structure of the industry. It's a little bit of background before I answer your question. So, yeah, just just to get right into it. The demand, for freight railroads, it's unfortunately been I guess the best word is mixed. In 1 sense, it's, you know, freight demand is growing.
So in volume terms, freight demand for the first half of the, of 2024 is about up about 2% across, yeah, that's that's across the US, maybe maybe a little bit, yeah, roughly the same across if you include Canada and Mexico as well. Let's call it 2%. However, that 2% is off a rather easy comparison because in 20, 23, railroad freight was was rather depressed for for a variety of reasons. And we're still not even back to where we were in 28 excuse me, 2018, which was we can call that sort of the high point, the recent high point. You know, what does that say about the economy of the US?
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