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Will Surge in US Freight Rail Traffic Continue?

PART:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
Part 12
Will Surge in US Freight Rail Traffic Continue? PART 12 OF 17

Canadian National’s Carload Growth Is Faster than Peer Average

Canadian National’s carloads

In 2017, Canadian National (CNI) has so far emerged as the front runner in terms of YoY (year-over-year) carload growth among class I peers. For the past few weeks, Canadian National Railway’s (CNI) carloads have been rising.

In the week ended March 11, 2017, overall volumes rose 8.4% on a YoY basis. In the same week, CNI’s railcar volumes rose to ~61,000 plus units from over 56,000 units in the comparable week of 2016. The rise in CNI’s carloads volume outpaced the rise in overall railcar volume in the US and Canadia in the tenth week of 2017.

Canadian National&#8217;s Carload Growth Is Faster than Peer Average

Canadian National&#8217;s Carload Growth Is Faster than Peer Average

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CNI’s railcar volumes excluding coal and coke, however, fell 11.2% in the tenth week of 2017. If you’d like to compare this week’s freight volume data with the previous week’s, check out Market Realist’s Week Ended March 4: Was US Rail Traffic on the Right Track?

Is coal important for Canadian National?

Canadian National’s coal carloads including coke fell 11.7% in the ninth week of 2017. The company moved 5,300 coal and petroleum coke railcars in the same week. The percentage fall in CNI’s coal volumes was in contrast with the 3.3% rise reported by rival Canadian Pacific (CP).

It’s worth noting that ~4% of CNI’s total 2016 revenue came from coal transportation. Coal’s contribution to the company’s total carloads was a mere 6% that year. Thus, 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 consider investing in the iShares US Industrials ETF (IYJ). Major US railroads make up 6.2% of the portfolio holdings of IYJ.

Leaders and laggards

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

  • food and kindred products
  • grain
  • crushed stone
  • metal products
  • metallic ores

The major commodity groups that reported declines included the following:

  • forest products
  • chemicals
  • nonmetallic minerals
  • automotive

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

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