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US Freight Traffic Takes the High Rail: Week Ended February 25

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Part 12
US Freight Traffic Takes the High Rail: Week Ended February 25 PART 12 OF 15

This Drove Canadian National’s Upward Momentum in Carloads

Canadian National’s carloads

Investors should note that 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 February 25, 2017, overall volumes rose 12% on a YoY (year-over-year) basis. In the same week, CNI’s railcar volumes rose to ~63,000 units from over 56,000 units in the comparable week of 2016.

This Drove Canadian National&#8217;s Upward Momentum in Carloads

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CNI’s railcars, excluding coal and coke volumes, rose an impressive 13.1% in the eighth 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 rose a slight 1.7% in the eighth week of 2017. The company moved 5,200 coal and petroleum coke railcars in the same week. The percentage fall in CNI’s coal volumes was much lower than the 10% fall reported by 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 always consider investing in the iShares US Industrials ETF (IYJ). Major US railroads make up 6.1% 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 Tracking Rail Traffic for the Week Ended February 18.

Leaders and laggards

In the week ended February 25, 2017, the major advancing commodity groups were as follows:

  • petroleum and chemicals
  • metals and minerals
  • automotive
  • grain

The major commodity groups that reported declines included the following:

  • farm products
  • grain mill products
  • primary forest products
  • pulp and paper products

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

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