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Week Ended March 4: Was US Rail Traffic on the Right Track?

PART:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Part 12
Week Ended March 4: Was US Rail Traffic on the Right Track? PART 12 OF 15

Despite Coal Downfall, Canadian National’s Carloads Kept Soaring

Canadian National’s carloads

In 2017, Canadian National (CNI) has clearly 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 following a rising trend.

In the week ended March 4, 2017, overall volumes rose 9.7% on a YoY basis. In the same week, CNI’s railcar volumes rose to 63,000 plus units from ~58,000 units in the comparable week of 2016.

 Despite Coal Downfall, Canadian National&#8217;s Carloads Kept Soaring

Despite Coal Downfall, Canadian National&#8217;s Carloads Kept Soaring

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CNI’s railcars, excluding coal and coke volumes, rose an impressive 12.2% in the ninth week of 2017. CNI’s volumes rose in tandem with those of US and Canadian railroads.

Is coal important for Canadian National?

Canadian National’s coal carloads including coke shrank 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 the 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. We can thus 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 consider investing in the iShares US Industrials ETF (IYJ). Major US railroads make up 6.2% of the portfolio holdings of IYJ. If you’d like to compare this week’s freight volume data with the previous week’s, check out Market Realist’s US Freight Traffic Takes the High Rail: Week Ended February 25.

Leaders and laggards

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

  • petroleum products
  • metals and minerals
  • grain

The major commodity groups that reported declines included the following:

  • lumber and wood products
  • primary forest products
  • automotive
  • grain mill products

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

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