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A Light at the End of Tunnel: Rail Traffic, Week Ended February 11

PART:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
Part 12
A Light at the End of Tunnel: Rail Traffic, Week Ended February 11 PART 12 OF 17

Canadian National’s Carloads: On the Right Track

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 February 11, 2017, overall volumes rose 5.3% on a YoY (year-over-year) basis. In the same week, CNI’s railcar volumes rose to ~61,000 units from ~58,000 units in the comparable week of 2016.

CNI’s railcars excluding coal and coke volumes rose an impressive 6.5% in the sixth week of 2017. CNI’s volumes in the reported week rose in tandem with Canadian railroads.

Canadian National’s Carloads: On the Right Track

Canadian National’s Carloads: On the Right Track

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Is coal important for Canadian National?

Canadian National’s coal carloads, including coke, dropped 4.8% in the sixth week of 2017. The company moved 5,600 coal and petroleum coke railcars that week, as compared to ~5,800 in the same week of 2016. The percentage fall in CNI’s coal volumes was in line with the percentage slump 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 can always consider investing in the iShares US Industrials ETF (IYJ). Major US railroads make up 6.4% of the portfolio holdings of IYJ. Investors interested in comparing this week’s freight volume data with the previous week should check out Market Realist’s US Economy on the Tracks: Rail Traffic, Week Ended February 4.

Leaders and laggards

In the week ended February 11, 2017, the major advancing commodity groups were as follows:

  • automotive
  • crushed stone
  • metallic ores
  • stone, clay, glass
  • waste and scrap materials

The major commodity groups that reported declines included the following:

  • forest products
  • petroleum and chemicals
  • farm products
  • grain

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

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