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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 14
Will Surge in US Freight Rail Traffic Continue? PART 14 OF 17

Did Coal Push Up Canadian Pacific’s Carloads in the 10th Week?

Canadian Pacific’s carloads

Canadian Pacific’s (CP) total carloads rose a marginal 0.9% in the week ended March 11, 2017. The company hauled 30,000 plus railcars that week, which was similar to total carloads in the corresponding week of 2016. However, CP’s railcars excluding coal fell 1.4% YoY (year-over-year) to settle at ~24,500 units as compared to 25,000 plus railcars in the week ended March 12, 2016.

Canadian Pacific normally earns 70% of its revenue from Canada and 30% from the United States. CP’s coal carloads rose slightly by 12.2% YoY in the tenth week of 2017, whereas Canadian National (CNI) reported a YoY fall of 11.2%.

Did Coal Push Up Canadian Pacific&#8217;s Carloads in the 10th Week?

Did Coal Push Up Canadian Pacific&#8217;s Carloads in the 10th Week?

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Why coal carloads matter to CP

Coal accounted for 11% of Canadian Pacific’s (CP) revenue and 12% of its carloads in 2016. The company mainly transports metallurgical coal meant for exports through Metro Vancouver’s port. Its coal traffic in Canada begins primarily at Teck Resources’ (TCK) mines in southeastern British Columbia.

During the past year, coal production and demand have been under pressure due to depressed prices, environmental concerns, and a shift from coal-fired power plants to natural-gas-based electricity generation. US steel producers’ capacity utilizations didn’t see a marked improvement in the recent quarter either.

All US-born class I railroads (UNP) are part of the portfolio holdings of the WisdomTree Earnings 500 ETF (EPS). 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?

Commodity groups

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

  • US grain
  • potash
  • metals, minerals, and consumer products

The major commodity groups that reported declines were as follows:

  • Canadian grain
  • fertilizer and sulfur
  • forest products
  • chemicals and plastic

Next, we’ll take a look at the changes in Canadian Pacific’s intermodal traffic.

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