TOP 100 TRANSPORTATION AND LOGISTICS SITES
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| The Economics of Fractional Aviation Remain Compelling Ravi Nagarajan submits:In today’s economic and political climate, few businesses seem less attractive than fractional aviation. Companies are under constant pressure to cut costs, particularly in areas that could be perceived as frivolous executive benefits, during a deep recession. Executives everywhere have noted the political criticism facing those who would dare to fly on corporate aircraft to Congressional hearings. Who in their right mind would purchase a corporate jet or even a fractional share in this environment? Like many other controversial economic issues, the debate over private aviation has been largely emotional and uninformed. The reality is that when a company is paying executives millions of dollars per year in compensation, it is important to ensure that these individuals are as productive as possible and can travel quickly and efficiently. It does not make much sense to require an executive who costs a company $5 million per year to fly commercial aircraft if that would consume an excessive amount of time and prevent the executive from reaching as many destinations as possible in the shortest amount of time. At a certain point, the economics favor private aviation.Complete Story » seekingalpha.com |
Buffett's Worrisome Economic Indicator: Railcar Loadings Continue to Decline Brian Kelly submits:On CNBC Friday afternoon, I spoke about our bearish stance on the Dow Jones Transports and we are not alone, even Warren Buffett, in a Good Morning America interview, indicated he is concerned about the decline in freight traffic. The following is an excerpt from our research report on the US Transportation sector. We shall present our analysis in three parts; today Warren Buffett’s favorite indicator railcar loadings, tomorrow the truck tonnage index, and on Wednesday diesel demand and inventories. Each week we receive the railcar loading report from Railfax. This report consolidates all railcar loads in North America. From this report we can determine whether or not shipments are increasing on a weekly basis.Complete Story » seekingalpha.com |
AP: Cash for Clunkers Heading for Junkyard Friday Greentech Media submits: By Michael KanellosThe Obama Administration is likely going to discuss how it plans to wind down the cash for clunkers program, according to, among others, the APComplete Story » seekingalpha.com |
Burlington Northern's New Engineer: Warren Buffett STOCKMANMARC submits: Buffett gave us subtle hints almost 3 years ago when he stated he wanted to "bag an elephant", who new the elephant was an "Iron Horse"? Buffett has said in the past he was looking for a large deal, something that would move the needle- the needle being Berkshire's (BRK.A) enormous stock portfolio. Well Warren Buffett just bought Burlington Northern Santa Fe (BNI), that is the whole company. BNSF will now be under the Berkshire Hathaway umbrella with companies such as Geico, Dairy Queen, See's Candies, and Shaw Carpets (see the whole list here). This is by far the largest deal Buffett has ever done which totals a whopping 44 billion. Before this, Berkshire's biggest acquisition was the $16 billion stock purchase of reinsurance giant General Re, announced in 1998. Buffett, who has been building up his rail holdings for several years, was in the headlines back in early 2007 when it was announced that he had taken positions in several of the major rail carriers. But why did he zero in on Burlington Northern? Here are some of the pieces to the puzzle:it's a business (railroads) that's easy to understandit has a high return on equity which is currently 15% for the trailing 12 months (last year it was 19%)it's a business with a moat (has high barrier to entry) not just anyone can start a railroad companyit had consistent earningsit's very efficient way of moving goodsit's a play on coal and other commoditiesit's throwing off lots of free cash flowit has high-quality management (its track record speaks for itself)Many people wondered why he had suddenly fallen in love with the sector. The simple answer is globalisation. With booming demand for commodities from the Far East and a hunger for cheap foreign goods in the West, the rail companies linking consumer and producer look appealing for the long haul. Buffett has said he realized a few years late that railroads were an appealing investment. As diesel prices rise, shipping by rail instead of truck becomes more attractive, and it would be extremely difficult for a competitor to build a new railroad. Continuing upward pressure of fuel costs makes rail transport increasingly more competitive than the trucking fleet and could prompt more wholesale purchasing within our own continent. The dominant trend is the demand for raw materials and machinery to fuel the construction booms in China and India. US rail firms transport grains and building and construction products for export; US exports to China. "I basically believe this country will prosper and more people will be moving more goods 10, 20, 30 years from now and the rails will benefit," Buffett told CNBC. It's also a bet on the future of another country -- China. China craves the coal and other raw materials that the U.S. produces. Those commodities fuel the great economic engine that is China, which is the factory to the world. U.S. coal and goods are shipped via rail to Pacific ports and then shipped to China. With his round-out purchase of Burlington Northern, Buffett thinks China will continue to be strong. Disclosure: Author is currently long BNIComplete Story » seekingalpha.com |
Airlines Are Not Long Term Investments Saj Karsan submits:On Wednesday, it was announced that shareholders in Japan Airlines (JALSY.PK) would be wiped out, as the company would undergo a restructuring that would see creditors and the Japanese government own the beleaguered airline. Obviously, the immediate problem was that the billions of dollars of the company's losses prevented the company from paying back the billions of dollars of the company's debt. But more fundamental than this is the plague that afflicts the entire airline industry, and always has.Warren Buffett is quoted as saying that the airline business in the U.S. “has made no money.” Thanks to a forgettable investment Buffett's Berkshire Hathaway (BRK.A) had made in US Air, he even went so far as to suggest a capitalist should have shot down the Wright brothers during their historic "first in flight" moment.Complete Story » seekingalpha.com |