CSX: Fall in Volume Minus Coal Takes Down Carloads in Week 18
In the week ended May 6, 2017, CSX’s (CSX) overall railcar volumes fell 1.4% YoY (year-over-year). Its freight volume stood at ~69,500 railcars, compared with ~70,500 in the corresponding week last year.
Its carloads, excluding coal and coke, fell 4.3% in the same week. Rival Norfolk Southern’s (NSC) carload business was slightly up during the same period. CSX’s coal and coke railcar volumes rose 9.3%. However, Norfolk posted a rise of 16.5% in the same category. Coal made up 16.5% of CSX’s volumes in 2016, compared with 19.5% in the previous year.
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Why is coal vital for CSX?
According to the EIA (U.S. Energy Information Administration), coal production in 2016 fell 18.0% from 158.0 MMst (million short tons) to 739.0 MMst, the lowest level of coal produced since 1978. In 2017, a rise in coal-fired electricity generation is expected to lead to a 7.0% rise in total US coal production, which is an additional 51.0 MMst. The majority of the rise could likely come from the Western and Central United States.
Eastern railroads have cited electricity generation plants’ overall shift from coal to natural gas (UNG) as one of the main reasons for the fall in utility coal transportation. The shift has affected all major US coal producers, including Alliance Resource Partners (ARLP), CONSOL Energy (CNX), and the bankrupt Peabody Energy (BTU). However, recent coal price trends backed by increased coal transportation could suggest a revival.
Bull and bear commodity groups
The commodity groups that posted significant rises in the week ended May 6, 2017, were the following:
- waste and non-ferrous scrap
- crushed stone, sand, and gravel
- nonmetallic minerals
- iron and steel scrap
The commodity groups that posted major falls were the following:
- metallic ore
- primary metal products
- primary forest products
- food products
Next, let’s take a look at CSX’s intermodal volumes in the 18th week of 2017.