Comparing Union Pacific’s Carloads
Union Pacific’s carloads
In the western United States, Union Pacific (UNP) competes with BNSF Railway, which is owned by Berkshire Hathaway (BRK-B). In the week ended February 18, 2017, UNP’s overall railcar volumes grew 7.2% YoY (year-over-year) to ~96,000 units.
Railcar volumes, excluding coal and coke, rose 1.8% YoY to 70,000 units, compared with 69,000 units in the same week of 2016. If you want to compare this week’s freight volume data with the previous week’s, check out Market Realist’s A Light at the End of Tunnel: Rail Traffic, Week Ended February 11.
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Why coal carloads matter
In the seventh week of 2017, UNP’s combined coal (ARLP) and coke carloads rose 25.3% YoY. Although UNP’s coal revenue fell 6.0% in 4Q16, fiscal 2017 has brought some hope for the company, given the recent upward trend in coal prices.
Coal’s (CNX) share of the company’s revenue was 14.4% in the same quarter, compared with 15.3% in the same period one year ago. UNP’s coal revenue depends on coal shipments originating in the Southern PRB (Powder River Basin).
According to the EIA (U.S. Energy Information Administration), PRB production has fallen over the past few years, mainly due to the recession and competition from natural gas. In 2016, PRB coal output fell significantly for the first time since 1998. Competition from natural gas (UGAZ), primarily resulting from reduced natural gas prices, has been one of the main factors affecting coal output recently.
Advancing and declining commodity groups
The advancing commodities in the week ended February 18, 2017, included:
- nonmetallic minerals
- primary forest products
- iron and steel scrap
The major commodity groups in negative territory were as follows:
- metallic ores
- petroleum products
- metals and products
- motor vehicles and equipment
- waste and non-ferrous scrap
In the next part, we’ll assess the position of UNP’s intermodal traffic in the week ended February 18, 2017.