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Tracking Freight Rail Traffic for the Week Ended January 21

PART:
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Part 12
Tracking Freight Rail Traffic for the Week Ended January 21 PART 12 OF 15

Which Commodities Boosted Canadian National’s Carloads?

Canadian National’s carloads

For the past few weeks, Canadian National Railway’s (CNI) carloads have been following a rising trend. In the week ended January 21, 2017, overall volumes rose 11.7% on a YoY (year-over-year) basis. In the same week, CNI’s railcar volumes rose to ~64,000 units from above 57,000 units in the comparable week of 2016.

CNI’s railcars, excluding coal and coke volumes, rose 14.2% in the third week of 2017. CNI’s volumes in the reported week rose in tandem with Canadian railroads’ overall.

Which Commodities Boosted Canadian National&#8217;s Carloads?

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Is coal important for Canadian National?

Canadian National’s coal carloads, including coke, fell 7.4% in the third week of 2017. The company moved 6,200 coal and petroleum coke railcars that week, compared with 6,700 in the same week of 2016. The percentage drop in CNI’s coal volumes was almost in tune with the percentage fall reported by Canadian Pacific (CP) in the same category.

It’s worth noting that ~4% of CNI’s total revenue in 2016 came from coal transportation. Coal’s contribution to the company’s total carloads was a mere 6% that year. 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 investors could consider investing in the iShares US Industrials ETF (IYJ). Major US railroads make up 6.4% of the portfolio holdings of IYJ.

Leaders and laggards

In the week ended January 21, 2017, the major advancing commodity groups were as follows:

  • lumber and wood products
  • petroleum and chemicals
  • automotive
  • grain

The major commodity groups that reported declines were the following:

  • primary forest products
  • pulp and paper products
  • nonmetallic minerals
  • grain mill products

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

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