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US Freight Rail Traffic Closed 52nd Week on a Positive Note

PART:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Part 12
US Freight Rail Traffic Closed 52nd Week on a Positive Note PART 12 OF 15

Double-Digit Rise in Volumes Minus Coal Pushed CNI’s Carloads Up

Canadian National’s carloads

For the past few weeks, Canadian National Railway’s (CNI) carloads have been positive compared to 2015. In the week ended December 31, 2016, overall volumes rose 9.6% on a YoY (year-over-year) basis. Railcar volumes rose to 55,000 units from 50,000-plus units that week in 2015.

CNI’s railcars excluding coal and coke volumes rose 10.5% in the week ended December 31, 2016. Overall Canadian railroad volumes rose 11%, and CNI’s railcar volumes rose in tandem.

Double-Digit Rise in Volumes Minus Coal Pushed CNI’s Carloads Up

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Is coal important for Canadian National?

Canadian National’s coal, including coke carloads, rose 3.2% in the 52nd week of 2016. The company moved 6,500 coal and petroleum coke railcars that week, compared to 6,300 in the comparable week in 2015. The percentage rise in CNI’s coal volumes was almost one-third the percentage change reported by Canadian Pacific (CP) in the same category.

It’s worth noting that ~4.0% of CNI’s total revenues in 3Q16 came from coal transportation. Coal’s contribution to the company’s total carloads was a mere 6.7% that quarter. We can surmise that CNI might be better positioned to avert coal’s headwinds than peers Norfolk Southern (NSC), CSX (CSX), Union Pacific (UNP), and Kansas City Southern (KSU).

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

Frontrunners and laggards

In the week ended December 31, 2016, the major advancing commodity groups were as follows:

  • Canadian grain
  • US grain
  • potash
  • chemicals and plastics

Major commodity groups that reported a fall were as follows:

  • crude
  • automotive

In the next part, we’ll take a look at intermodal traffic for Canadian National Railway.

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