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Week 18: US and Canadian Freight Rail Traffic Rises, Mexico Lags

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Part 12
Week 18: US and Canadian Freight Rail Traffic Rises, Mexico Lags PART 12 OF 14

Canadian National Railway: Non-Coal Volumes Lift Carloads in Week 18

Canadian National’s carloads

Since January 1, 2017, Canadian National Railway’s (CNI) volumes have risen the most YoY (year-over-year) among Class I railroads. For the past few weeks, Canadian National’s carloads have risen.

In the week ended May 6, 2017, Canadian National Railway’s overall volumes rose 18.2% on a YoY basis. In the same week, its railcar volumes rose to more than 62,200 units, compared with 52,700 units in the comparable week of 2016. Canadian National’s carload volumes rose more than overall railcar volumes in the United States and Canada.

Canadian National Railway: Non-Coal Volumes Lift Carloads in Week 18

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Railcar volumes, excluding coal and coke, rose 19.6% in the 18th week of 2017 for Canadian National Railway. Coke and coal products were almost flat, reaching 2.5% compared with 2016.

Should we overlook Canadian National’s coal exposure?

Canadian National Railway’s coal carloads, including coke, were flat in the 18th week of 2017. The company moved ~4,700 coal and petroleum coke railcars that week. The percentage rise in Canadian National’s coal volumes was much lower than the 31.0% rise reported by rival Canadian Pacific (CP).

For Canadian National Railway, coal revenue was just 4.0% of 2016’s total operating revenue. Coal’s contribution to the company’s total carloads was a mere 6.0% in 2016. As a result, Canadian National might be better positioned to avert coal’s headwinds than peers Norfolk Southern (NSC), CSX (CSX), and Union Pacific (UNP).

Transportation sector investors could consider investing in the iShares US Industrials ETF (IYJ). Major US railroad companies make up 6.2% of IYJ’s portfolio holdings.

Leaders and laggards

In the week ended May 6, 2017, the major rising commodity groups were as follows:

  • food and kindred products
  • lumber and wood
  • crushed stone
  • metal products

The main falling commodity groups were the following:

  • chemicals
  • grain mill products
  • stone clay and glass

In the next article, we’ll take a look at Canadian National Railway’s intermodal traffic in the 18th week of 2017.

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