Solid Growth in Volumes without Coal Raises CNI’s Carloads
So far in 2017, Canadian National Railway (CNI) has emerged as the front-runner in terms of YoY (year-over-year) carload growth among its Class I peers. For the past few weeks, CNI’s carloads have been rising.
In the week ended March 25, 2017, the company’s overall volumes rose 16.2% YoY. In the same week, CNI’s railcar volumes rose to almost 64,000 units from 55,000 units in the comparable week of 2016. The rise in CNI’s carload volumes outpaced the rise in overall railcar volumes in the United States and Canada in the 12th week of 2017.
CNI’s railcar volumes, excluding coal and coke, rose 19.7% in the 12th week of 2017. However, there was a fall in coke and coal products compared to 2016.
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Is coal important to Canadian National?
Canadian National’s coal carloads, including coke, fell 12.6% in the ninth week of 2017. The company moved 5,300 coal and petroleum coke railcars that week. The percentage fall in CNI’s coal volumes was in stark contrast to the negligible rise reported by rival Canadian Pacific (CP) in the 12th week of 2017.
It’s worth noting that ~4.0% of CNI’s total 2016 revenue came from coal transportation. Coal’s contribution to the company’s total carloads was a mere 6.0% in the year. So 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).
Investors in the transportation sector can consider investing in the iShares US Industrials (IYJ). Major US railroad companies make up 6.2% of the portfolio holdings of IYJ.
Leaders and laggards
In the week ended March 25, 2017, the major rising commodity groups were as follows:
- food and kindred products
- crushed stone
- metal products
- metallic ore
The major commodity groups that reported falls include the following:
- forest products
- stone, clay, and glass
- non-metallic minerals
In the next part, we’ll take a look at Canadian National Railway’s intermodal traffic.