Unloading Canadian Pacific’s Latest Carloads
Canadian Pacific’s carloads
Canadian Pacific’s (CP) total carloads fell a marginal 0.6% in the week ended February 25, 2017. The company hauled ~30,000 railcars that week, as compared to the ~30,000 in the corresponding week of 2016. CP’s railcars excluding coal rose 2.9% YoY (year-over-year) to settle at ~26,000 units, as compared to 25,000 railcars in the week ended February 27, 2016.
Canadian Pacific normally receives 70% of its revenue from Canada and 30% from the United States. CP’s coal carloads fell 16.2% YoY in the eighth week of 2017, whereas Canadian National (CNI) reported a YoY rise of 1.7%.
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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’s 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.
Notably, all US-born Class I railroads (UNP) are included in 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 Tracking Rail Traffic for the Week Ended February 18.
In the week ended February 25, 2017, the major advancing commodity groups were as follows:
- US grain
- chemicals and plastics
- metals, minerals, and consumer products
The major commodity groups that reported declines were the following:
- Canadian grain
- fertilizer and sulfur
- forest products
In the next and final part of this series, we’ll take a look at the changes in Canadian Pacific’s intermodal traffic.