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?
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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.
The advancing commodities in the week ended March 11, 2017, included:
The major commodity groups in negative territory were as follows:
In the next part, we’ll assess the position of UNP’s intermodal traffic in the week ended March 11, 2017.