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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 6
Will Surge in US Freight Rail Traffic Continue? PART 6 OF 17

How Union Pacific’s Carloads Compare to BNSF Railway’s

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 March 11, 2017, UNP’s overall railcar volumes rose 9.2% YoY (year-over-year) to ~94,000 units.

Railcar volumes, excluding coal and coke, jumped 7.3% YoY to 73,000 plus units as compared to ~68,000 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 Week Ended March 4: Was US Rail Traffic on the Right Track?

How Union Pacific&#8217;s Carloads Compare to BNSF Railway&#8217;s

How Union Pacific&#8217;s Carloads Compare to BNSF Railway&#8217;s

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Why coal carloads matter

In the tenth week of 2017, UNP’s combined coal (ARLP) and coke carloads rose an impressive 16.4% YoY. Although UNP’s coal revenue fell 6.0% in 4Q16, fiscal 2017 has brought some hope for the company given the upward momentum in coal prices.

Coal’s (CNX) share of the company’s total revenue was 14.4% in the corresponding quarter compared to 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 (US 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.

Rising and falling commodity groups

The advancing commodities in the week ended March 11, 2017, included:

  • grain
  • iron and steel scrap
  • metals and products
  • crushed stone, gravel, and sand
  • primary forest products

The major commodity groups in negative territory were as follows:

  • metallic ores
  • petroleum 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 March 11, 2017.

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