Price Action Re: UNP Past Few Days Has Been Incredible -- October 26, 2021

A reader sent me a random note regarding ports on the US eastern seaboard.

My not-ready-for-prime-time reply:

This is quite coincidental. I can't recall but I think I posted a note on the blog (if I didn't post it there, I sent the note to [a reader]; I honestly don't remember) ... regarding the beneficiary of any opening of the ports with the choke points.

Historically, there is always huge competition between "trucking" and "railroads."

I never knew how intense that competition was until I started the blog some years ago.

Right now, the trucking industry is in a world of pain -- no drivers. [As soon as that was noted in the press, one should have looked at railroads for investment considerations; I'm somewhat surprised the CNBC talking heads never noted this. Huge miss on their part. Shame, shame.]

When the trucking industry is unable to meet demand, the trains benefit.

UNP has had a huge, huge run-up over the past few days, despite the high cost of diesel.

Investors are betting that the choke points at the ports will be resolved sooner or later; and if the auto industry takes off in CY2022, the railroads will be a huge beneficiary.

In addition, crude-by-rail, and there's a possibility, though remote, that the US will again become a huge exporter of coal if China / Asia ends up in dire energy straits.

I will be curious if Florida can open its ports. We'll see.

Folks will immediately opine that the sailing time  through the Panama Canal will be intolerable. Give me a break. They are spending two months anchored off-shore Californa, and it will only be an extra month -- if that long -- to get to Florida.

All those containers headed to California will be railroaded from East Coast to California. There are only two RRs that go into California: UNP and Burlington Northern (owned by Warren Buffett).

Did I forget anything?

Oh, yes, Resident Biden is a huge fan of railroads. Probably won't sign off on anything that hurts the trains.