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Week 15: US Freight Rail Traffic Rises: Are Good Times Ahead?

PART:
1 2 3 4 5 6 7 8 9 10 11 12 13 14
Part 12
Week 15: US Freight Rail Traffic Rises: Are Good Times Ahead? PART 12 OF 14

Canadian National Railway: Double-Digit Rise Continues in Week 15

Canadian National’s carloads

Since January 1, 2017, Canadian National Railway (CNI) has clearly emerged as the top Class I railroad in terms of YoY (year-over-year) rises in volumes. For the past few weeks, CNI’s carloads have been rising continuously.

In the week ended April 15, 2017, the company’s overall volumes rose 16.7% on a YoY basis. In the same week, its 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 15th week of 2017.

Canadian National Railway: Double-Digit Rise Continues in Week 15

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CNI’s railcar volumes, excluding coal and coke, rose 16.4% in the 15th week of 2017. There was also a rise of nearly 20.0% in coke and coal products compared to 2016. If you want to compare this week’s freight volume data with the previous week’s data, be sure to visit Market Realist’s Week 14: US Freight Rail Volumes on a Growth Trajectory.

Should we overlook CNI’s coal exposure?

Coal carloads, including coke for Canadian National Railway, rose 20.0% in the 15th week of 2017. The company moved ~6,000 coal and petroleum coke railcars that week. The percentage rise in CNI’s coal volumes was much higher than the 9.3% rise reported by rival Canadian Pacific (CP) in the same category.

It’s worth noting that ~4.0% of CNI’s total 2016 revenue came from coal transportation. Coal’s contribution to its total carloads was a mere 6.0% in 2016. As a result, CNI might be better positioned to avert coal’s headwinds than its peers Norfolk Southern (NSC), CSX (CSX), and Union Pacific (UNP).

Transportation sector investors 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 April 15, 2017, the major rising commodity groups were as follows:

  • food and kindred products
  • grain
  • crushed stone
  • metal products

The main declining commodity groups were the following:

  • primary forest products
  • nonmetallic minerals
  • metallic ores
  • lumber and wood products

In the next part, we’ll take a look at Canadian National Railway’s intermodal traffic in the 15th week of 2017.

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