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CSX Corporation’s Other Railcar Units: Under the Shadow of Coal

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CSX’s weekly railcar units

In the week ending March 19, 2016, CSX Corporation (CSX) recorded a marginal YoY (year-over-year) fall of 2.5% in railcar units excluding coal and coke. CSX hauled 54,847 units in the same week against 56,276 units in the week ending March 21, 2015. The fall in railcar units other than coal and coke was in line with its main competitor, Norfolk Southern (NSC). But we should note that CSX’s fall in total railcar units was about half what US railroads reported in the week ending March 19, 2016.

CSX Corporation's Other Railcar Units: Under the Shadow of Coal

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Why coal carloads matter to CSX

CSX’s coal plus coke carloads went down by ~28% YoY in the week ending March 19, 2016, at more than 16,000 units. During the same period in 2015, it was 22,000 units. Investors should note, however, that this fall is in line with that of its arch rival, Norfolk Southern, in the same commodity group during the week ending March 19. Coal represented 16% of CSX’s total volumes and 19% of total revenues in 2015.

According to the March 2016 press release from US Energy Information Administration, the Appalachia region’s coal output is expected to fall by 9% in 2016. But the agency expects total coal production to increase by 2% and stabilize in 2017. CSX mainly connects coal mining operations in the Appalachia region. This will likely impact CSX’s coal transportation in 2016.

Eastern US railroads have cited the shift from coal to natural gas (UNG) at electricity generation plants as one of the reasons for the fall in utility coal transportation. The coal tsunami has affected major coal producers in the US like Alliance Resource Partners (ARLP), CONSOL Energy (CNX), and Peabody Energy (BTU).

Bull and bear commodity groups

Commodities that posted major gains for CSX in the week ending March 19, 2016, include:

  • waste and nonferrous scrap
  • motor vehicles and parts
  • metallic ores
  • iron and steel scrap

The major bear commodity groups were farm products, excluding grain, petroleum and petroleum products, primary forest products, pulp and paper products, grain, primary metal products, and crushed stone, sand, and gravel.

Notably, intermodal segments have had a bumpy ride in recent quarters for all Class I railroads. We’ll analyze CSX’s intermodal traffic in the next part.

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