Why Canadian National’s Carload Growth Outpaced Its Class I Peers
Canadian National’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 18, 2017, the company’s overall volumes rose 16.9% on a YoY basis. In the same week, CNI’s railcar volumes rose to over 64,000 units from over 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 11th week of 2017.
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CNI’s railcar volumes excluding coal and coke also rose 12.5% in the 11th week of 2017.
Is coal important for Canadian National?
Canadian National’s coal carloads including coke fell 11.7% in the ninth week of 2017. The company moved 5,300 coal and petroleum coke railcars in the same week. The percentage fall in CNI’s coal volumes was in stark contrast to the 3.3% rise reported by rival 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% in the year. Thus, CNI might be better positioned to avert coal’s headwinds than its peers Norfolk Southern (NSC), CSX (CSX), Union Pacific (UNP), and Kansas City Southern (KSU).
Transportation sector investors can consider investing in the iShares US Industrials ETF (IYJ). Major US railroad companies make up 6.2% of the portfolio holdings of IYJ.
Leaders and laggards
In the week ended March 18, 2017, the major rising commodity groups were as follows:
- petroleum products
- crushed stone
- metal products
- metallic ore
- automotive products
The major commodity groups that reported falls included the following:
- forest products
- stone, clay, and glass
- iron and steel scrap
- nonmetallic minerals
In the next article, we’ll take a look at Canadian National Railway’s intermodal traffic.