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Freight Rail Traffic for the Week Ended December 17

PART:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Part 12
Freight Rail Traffic for the Week Ended December 17 PART 12 OF 15

Fall in Coal Volumes Pulls down Canadian National’s Carloads

Canadian National’s carloads

For the past few weeks, Canadian National Railway’s (CNI) carloads have been positive compared with 2015. However, for the reported week ended December 17, 2016, the change in volumes was in negative territory. The overall volumes fell 1.6%.

CNI recorded a marginal rise in railcars excluding coal and coke. When overall Canadian railroad volumes declined, CNI’s railcar volumes followed.

Fall in Coal Volumes Pulls down Canadian National&#8217;s Carloads

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Is coal important for Canadian National?

Canadian National’s coal, including coke carloads, fell 14.4% in the week ended December 17, 2016. The company moved ~7,100 coal and petroleum coke railcars in the same week, compared with 8,300 in the comparable week last year. The percentage fall in CNI’s coal volumes was far higher than the negative change reported by Canadian Pacific (CP) in the same category.

It’s worth noting that ~4.0% of CNI’s total revenue in 3Q16 came from coal transportation. Coal’s contribution to the company’s total carloads was a mere 6.7% that quarter.

Therefore, we can probably conclude that CNI is better positioned to avert coal’s headwinds than peers such as Norfolk Southern (NSC), CSX (CSX), Union Pacific (UNP), and Kansas City Southern (KSU).

Transportation sector–specific investors could consider investing in the iShares US Industrials ETF (IYJ). Major US railroads make up 5.8% of the portfolio holdings of IYJ.

The frontrunners and the laggards

In the week ended December 17, 2016, the major advancing commodity groups were as follows:

  • pulp and paper products
  • nonmetallic minerals
  • farm products
  • grain mill products

Major commodity groups that reported a fall were as follows:

  • forest products
  • petroleum and chemicals
  • automotive
  • grain

If you’re interested in comparing this week’s traffic data with the previous week’s, you can refer to Freight Rail Traffic for the Week Ended December 10. In the next part, we’ll take a look at intermodal traffic for Canadian National Railway. For more information on US major railroad stocks, visit Market Realist’s Railroads page.

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