Kansas City Southern: Coal Growth Story Is Intact in Week 15
Kansas City Southern’s carloads
In the week ended April 15, 2017, Kansas City Southern’s (KSU) total railcars rose 10.0% compared to the corresponding week of 2016. In the reported week, Kansas City Southern hauled well over 24,000 railcars compared to nearly 22,500 units in the week ended April 16, 2016. Carloads other than coal and coke rose an impressive 65.0% YoY (year-over-year).
KSU’s recent growth in coal and coke carloads has been phenomenal. The company’s coal and coke carloads rose a staggering 65.0% in the 15th week of 2017. The company hauled ~3,800 railcars of coal and coke compared to nearly 2,300 carloads in the corresponding week of 2016.
If you want to compare this week’s freight volume data with the previous week’s data, check out Market Realist’s Week 14: US Freight Rail Volumes on a Growth Trajectory.
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Are coal carloads vital to KSU?
Utility coal, other coal, and petroleum coke accounted for 9.0% of KSU’s total revenues in 2016. The share of these commodities’ carloads out of its total carloads was 11.7% in 2016. Although that percentage may not seem significant, it’s noteworthy, given KSU’s small scale of operations.
Kansas City Southern moves coal originating in the Powder River Basin in Wyoming and the US Midwest. Coal producers operating in the region, including Alpha Natural Resources (ANR) and Peabody Energy (BTU), witnessed weak coal shipments in 2016. Black Hills (BKH) operates in the same region, but it doesn’t produce coal commercially.
Investors interested in the transportation sector could consider investing in the iShares US Industrials (IYJ). Major US railroad companies make up 6.2% of IYJ’s portfolio.
Rising and falling commodities
In the week ended April 15, 2017, the following commodity groups rose:
- crushed stone, sand, and gravel
- petroleum products
- metals and products
- motor vehicles and equipment
These commodity groups showed a volume decline:
- chemicals and products
- metallic ores
Next, we’ll take a look at Kansas City Southern’s intermodal traffic in Week 15 of 2017.