Strikes by train drivers and pilots unions over pay and conditions in Germany are expected to disrupt travellers and freight inside and outside the country from Tuesday evening. Train drivers union GDL has called for a nine-hour nationwide strike starting on Tuesday evening. Pilots union Vereinigung Cockpit has announced a two-day strike at Lufthansa s freight arm starting at 0100 GMT on Wednesday.
The strike by drivers, which runs from 1900 GMT Tuesday until 0400 GMT on Wednesday, follows two three-hour strikes in recent weeks. It will predominantly affect morning commuters plus freight transported at night in almost 5,000 trains. Strikes in rail freight can affect production after just a couple of days, because goods transported by rail often cannot be swiftly shifted to road or sea, Achim Dercks, the deputy head of Germany s Chambers of Commerce, told Reuters on Tuesday.
GDL is seeking a 5 percent pay rise and a two-hour shorter working week of 37 hours from employer Deutsche Bahn, the state-owned rail operator. The union is also seeking a mandate to negotiate for train guards and other personnel. Deutsche Bahn has rejected this.
Deutsche Bahn had proposed halting the pay dispute until the government had passed a law on standardised wages, which would see the wage deal for the union with the most members in a company apply. GDL has refused to wait. Deutsche Bahn criticised the decision to widen the strikes and said it may take until Wednesday midday before trains return to normal.
It said it was prepared to negotiate at any time. CARGO STRIKE The train drivers walkout will overlap with the two-day strike by pilots at Lufthansa Cargo. That strike will be the sixth this year by pilots union Vereinigung Cockpit, which is pushing management to retain a scheme that allows them to retire early at 55 and still receive a portion of their wages.
Lufthansa has estimated the strikes have cost it around 70 million euros so far. The walkout will not affect passengers. Lufthansa Cargo, which normally carries out 21 freighter flights during the strike period, said the walkout would have little impact and that it expected to carry out all flights.
Two flights will depart outside of the strike period, it said. Several pilots had volunteered to fly, a spokesman said. The pilots union said an end to the row was not in sight and more strikes could come.
Next time we could hold a strike at Lufthansa s main passenger airline business or Germanwings, VC board member Joerg Handwerg told Reuters.
U.S. railroads are obvious winners from the latest delay in the Keystone XL Pipeline approval, and some of the freight operators with the biggest growth in petroleum shipments look undervalued, according to an analysis of Thomson Reuters data. While shares in some railroad companies have recently hit record highs, there may be still more upside potential.
CSX Corp 1 and Norfolk Southern Corp 2 are both trading 15 percent or more below their warranted share price, according to a measure of intrinsic valuation tracked by Thomson Reuters StarMine. The Obama administration s decision to extend indefinitely the review process for the controversial oil pipeline connecting Canada with the U.S. Gulf Coast effectively cements the view that U.S.
freight rail haulers are here to stay as big players in the oil-shipping business 3 . Users have realized rail is a great diversification in terms of delivery of crude to the refineries, regardless of whether Keystone goes ahead or not, said Walter Spracklin, equity research analyst at RBC Capital Markets 4 in Toronto. If Keystone doesn t go ahead, it hammers home the point.
Petroleum product volumes by freight rail rose by more than 28 percent in 2013 to 1.54 million carloads, according to data from Cowen & Co and RailShare, and oil-by-rail is by far the freight rail industry s fastest-growing segment. So far this year, traffic is running 10 percent ahead of last year at this time. The biggest player in the sector is Burlington Northern Santa Fe, a unit of Warren Buffett s insurance and industrial conglomerate Berkshire Hathaway Inc 5 , which accounts for roughly a third of U.S.
oil-by-rail traffic. It is followed by Union Pacific Corp 6 , Norfolk Southern, CSX and Kansas City Southern 7 . Union Pacific shares on Monday hit an all-time high, gaining 1 percent to close at $191.54, while Berkshire s A shares touched their record last Thursday: $191,506.
But both are trading near their full valuations, according to intrinsic valuation tracked by Thomson Reuters StarMine. StarMine calculates a stock s intrinsic value using profit growth estimates from the most accurate analysts tracking the shares. By that measure, the two freight haulers with the largest year-to-date gains in oil-by-rail volumes, CSX and Norfolk Southern, are both trading 15 percent or more below their warranted share price.
Both saw their crude-related volume rise more than 50 percent last year, to about 2 percent of the overall volume each moved. So far this year, CSX s petroleum product volume is up by 59 percent and Norfolk Southern s is up by 27.5 percent. On Monday, CSX shares closed at $28.18, but StarMine pegs their intrinsic value at $33.32, representing an upside of around 18 percent.
For Norfolk Southern, which ended the day at $96.89, the intrinsic value model price is $115. Meanwhile BNSF s crude-related volume, which rose 42.6 percent in 2013 to account for 5 percent of its total carloads, is up by just 10.7 percent this year. To be sure, the valuation picture for Berkshire is more nuanced than its rail industry rivals given that BNSF accounted for just 12 percent of the conglomerate s revenue in 2013 but more than 20 percent of Berkshire s pretax profit.
Still, it is growing fast enough to have justify plans for Berkshire to buy up to 5,000 new tanker cars rather than lease them as is typically done by rail operators. Keystone shows new pipelines are difficult to get approved, RBC s Spracklin said. Crude by rail is not difficult.
It s a very flexible service. (Reuters) References ^ CSX Corp (www.reuters.com) ^ Norfolk Southern Corp (www.reuters.com) ^ business (www.reuters.com) ^ Markets (www.reuters.com) ^ Berkshire Hathaway Inc (www.reuters.com) ^ Union Pacific Corp (www.reuters.com) ^ Kansas City Southern (www.reuters.com)
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