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US Freight Rail Traffic on Track, but Mexico Stays Derailed

PART:
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Part 10
US Freight Rail Traffic on Track, but Mexico Stays Derailed PART 10 OF 14

Behind Kansas City Southern’s Carloads in Week 27

Kansas City Southern’s freight traffic

Kansas City Southern (KSU), a US- and Mexico-focused railroad business, is the United States’ smallest Class I railroad in revenue terms. In the 27th week of 2017, Kansas City Sothern’s total freight railcar volumes (excluding intermodal) grew ~2.5% YoY (year-over-year). KSU moved ~24,000 railcars in the week ended July 8, 2017, compared with ~23,500 railcars in the week ended July 9, 2016.

This rise in total railcars was fueled by carloads other than coal and coke. KSU saw its carloads excluding coal and coke rise 6.1% YoY last week.

Behind Kansas City Southern&#8217;s Carloads in Week 27

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KSU reported a rise in volumes last week, which came in contrast with the slump posted by Mexican railroads. But the company’s rise was in line with the gains reported by other US railroads in the 27th week of 2017.

KSU’s coal traffic

KSU’s coal and coke carloads posted much higher volumes YoY (year-over-year) in 1Q17. However, coal volume growth, in percentage terms, declined in the second quarter of 2017.

In the week ended July 8, 2017, KSU posted an 11% fall in coal (CNX) and coke volumes. The company moved ~4,500 coal and coke railcars in the 27th week of 2017, compared with ~5,000 carloads in the same week of 2016.

Weekly changes in commodity groups

The advancing commodity groups in the week ended July 8, 2017, were:

  • crushed stone, sand, and gravel
  • petroleum products
  • metals and products
  • motor vehicles and equipment
  • iron and steel scrap

The declining commodity groups in the same week were:

  • grain
  • chemicals and allied products
  • waste and nonferrous scrap

ETF option

The iShares Transportation Average ETF (IYT) has the highest holding in Kansas City Southern (5.7%) among all other ETFs. IYT also holds 10.3% in US trucking companies (JBHT) and ~25% in major railroads (CSX).

Next, we’ll look at KSU’s intermodal volumes.

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