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US Economy on the Tracks: Rail Traffic, Week Ended February 4

PART:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Part 12
US Economy on the Tracks: Rail Traffic, Week Ended February 4 PART 12 OF 15

The Long Ride of 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 February 4, 2017, overall volumes rose 9.1% on a YoY (year-over-year) basis. In the same week, CNI’s railcar volumes rose to ~64,000 units from more than 58,000 units in the comparable week of 2016.

CNI’s railcars excluding coal and coke volumes rose an impressive 11.4% in the fifth week of 2017. CNI’s volumes in the reported week rose in tandem with Canadian railroads.

The Long Ride of Canadian National’s Carloads

The Long Ride of Canadian National’s Carloads

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Is coal important for Canadian National?

Canadian National’s coal carloads, including coke, dropped 8.6% in the fifth week of 2017. The company moved 6,100 coal and petroleum coke railcars that week, as compared to ~6,700 in the same week of 2016. The percentage fall in CNI’s coal volumes was in complete contrast to the percentage rise 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 Your Freight Rail Traffic for the Week Ended January 28.

Leaders and laggards

In the week ended February 4, 2017, the major advancing commodity groups were as follows:

  • petroleum and chemicals
  • petroleum and chemicals
  • metals and minerals
  • automotive
  • grain

The major commodity groups that reported declines included the following:

  • lumber and wood products
  • primary forest products
  • pulp and paper products
  • metal products

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

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