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

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

Canadian Pacific Railway: A Summary of Freight Traffic in Week 18

Canadian Pacific’s carloads

Canadian Pacific Railway’s (CP) total carloads rose 12.4% in the week ended May 6, 2017. The company hauled more than 32,400 railcars that week, similar to its total carloads in the corresponding week of 2016. CP’s railcars, excluding coal, rose 14.9% YoY (year-over-year) to settle at more than 26,200 units, compared with ~22,800 units in the week ended May 7, 2016.

Canadian Pacific Railway normally earns 70.0% of its revenue from Canada and 30.0% from the United States. Its non-coal carloads rose 14.9% YoY in the 18th week of 2017, whereas Canadian National Railway (CNI) reported a YoY rise of 19.6%.

Canadian Pacific Railway: A Summary of Freight Traffic in Week 18

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Intermodal traffic

Canadian Pacific Railway’s intermodal volumes have been rising for the past few weeks. In the week ended May 6, 2017, it reported a 4.6% rise in overall intermodal traffic to ~19,500 from nearly 18,600 carloads in the corresponding week last year.

Why coal carloads matter to CP

Coal accounted for 11.0% of CP’s revenue and 12.0% of its carloads in 2016. The company mainly transports metallurgical coal meant for export through Metro Vancouver’s port. Its coal traffic in Canada begins primarily at Teck Resources’ (TCK) mines in southeast British Columbia.

During the past year, coal production and demand have been under pressure due to depressed prices, environmental concerns, and a shift away from coal-fired power plants to natural gas–based electricity generation. In fact, US steel producers’ capacity utilizations didn’t see a marked improvement in the recent quarter either. All US-based Class I railroad companies (UNP) are included in the portfolio holdings of the WisdomTree Earnings 500 ETF (EPS).

Commodity groups

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

  • potash
  • metals, minerals, and consumer products
  • grain

The major commodity groups that fell were the following:

  • chemical and plastic
  • automotive

To compare this week’s freight volume data with the previous week’s data, check out Market Realist’s Week 17: US Freight Rail Traffic Is in Zigzag Mode.

In this series, we learned about the freight rail traffic of all Class I railroads in the US in the 18th week, which ended May 6, 2017. For more information on major US railroad stocks, please visit Market Realist’s Railroads page.

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