![Today we are breaking down the $140 Billion freight railroad business, Union Pacific. We cover the consolidation of the freight railroad industry, how they have been revived by a change in operating philosophy, and contrast rails with other modes of transportation. <br /> <br />Our guest is Matt Reustle, the CEO of Colossus and a former transport analyst. For the full show notes, transcript, and links to the best content to learn more, check out the episode page here: https://www.joincolossus.com/episodes/88720526/reustle-union-pacific-real-economic-rails<br /> <br />-----<br /> <br />This episode is brought to you by Tegus. Tegus is the new digital hub for market intelligence. The Tegus platform empowers Investors and Corporate Development teams to invest smarter by pairing best-in-class technology with the highest quality user-generated content and data. Find out why a majority of the top firms are using Tegus on a daily basis. If you're ready to go deeper on any company and you appreciate the value of primary research, head to tegus.co/breakdowns for a free trial.<br /> <br />-----<br /> <br />This episode is brought to you by Scribe. Scribe is the trusted transcription provider for the business and investing community. Scribe is designed to accurately transcribe messy, real-world audio and is unique in that it’s optimized for the complexities of enterprise audio, such as company and product names, currencies, accents and numbers. Visit kensho.com/breakdowns to learn more and unlock your free trial.<br /> <br />—--<br /> <br />Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.<br /> <br />Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.<br /> <br />Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss | @ReustleMatt<br /> <br />Show Notes<br />[00:00:00] - Introduction<br />[00:03:01] - [First question] - A general overview of the transportation sector<br />[00:05:38] - What a Class 1 railway is and what the railway industry looks like<br />[00:07:40] - Is there cartel-like behavior and collusion between railway companies?<br />[00:12:24] - What a rail network consists of at the unit and asset level<br />[00:17:48] - Whether or not consumer railroads are independent from freight railroads <br />[00:18:57] - Interchange when goods are transferred from the east coast to the west coast <br />[00:20:17] - Who Union Pacific’s customers are, what they move, and their business writ large <br />[00:25:35] - The Box; Whether or not all transport volume in 50 years will be intermodal<br />[00:26:37] - How they determine the rate they charge customers <br />[00:28:41] - Ways that geography impacts what is being transported <br />[00:31:28] - The income statement and economics of rails through the lens of UNP<br />[00:36:11] - Improving efficiency and ROI while not having to submit to customers <br />[00:40:12] - How different policies affect railway margin profiles <br />[00:41:56] - Operating ratios and why they’re the metric most referenced for performance<br />[00:44:38] - The nature of cyclicality and its driving forces <br />[00:48:15] - Thoughts about capital allocation given being high CapEx and their free cash flow<br />[00:52:27] - How inflation and current events lately positively and negatively affect UNP<br />[00:54:16] - What would make him nervous as an analyst looking at UNP in the years ahead<br />[00:56:33] - Talk or plans to electrify and migrate away from fossil fuels <br />[00:58:22] - Lessons learned from UNP that could be applied to other industries and investing<br /><br />#businessbreakdowns #unionpacific #podcasts](https://media.thebusinessprofessor.com/wp-content/plugins/youtube-feed-pro/img/placeholder.png)
Today we are breaking down the $140 Billion freight railroad business, Union Pacific. We cover the consolidation of the freight railroad industry, how they have been revived by a change in operating philosophy, and contrast rails with other modes of transportation.
Our guest is Matt Reustle, the CEO of Colossus and a former transport analyst.
Show Notes
[00:00:00] – Introduction
[00:03:01] – [First question] – A general overview of the transportation sector
[00:05:38] – What a Class 1 railway is and what the railway industry looks like
[00:07:40] – Is there cartel-like behavior and collusion between railway companies?
[00:12:24] – What a rail network consists of at the unit and asset level
[00:17:48] – Whether or not consumer railroads are independent from freight railroads
[00:18:57] – Interchange when goods are transferred from the east coast to the west coast
[00:20:17] – Who Union Pacific’s customers are, what they move, and their business writ large
[00:25:35] – The Box; Whether or not all transport volume in 50 years will be intermodal
[00:26:37] – How they determine the rate they charge customers
[00:28:41] – Ways that geography impacts what is being transported
[00:31:28] – The income statement and economics of rails through the lens of UNP
[00:36:11] – Improving efficiency and ROI while not having to submit to customers
[00:40:12] – How different policies affect railway margin profiles
[00:41:56] – Operating ratios and why they’re the metric most referenced for performance
[00:44:38] – The nature of cyclicality and its driving forces
[00:48:15] – Thoughts about capital allocation given being high CapEx and their free cash flow
[00:52:27] – How inflation and current events lately positively and negatively affect UNP
[00:54:16] – What would make him nervous as an analyst looking at UNP in the years ahead
[00:56:33] – Talk or plans to electrify and migrate away from fossil fuels
[00:58:22] – Lessons learned from UNP that could be applied to other industries and investing