Canadian National’s railcars
Canadian National Railway (CNI) recorded a nearly 20% fall in total railcars in the week ended April 16, 2016. The company hauled nearly 55,000 railcars in the same week compared to 68,000 units in the week ended April 18, 2015.
CNI’s railcars excluding coal and coke fell by ~16% in the last reported week of 2016. Note that CNI received 18% of its revenue from US and Canadian domestic traffic each in 2015. The fall in CNI’s total railcar units for the week ended April 16, 2016, was higher than the fall in total US and Canadian reported railcars.
Is coal important for Canadian National?
Canadian National’s coal including coke carloads fell by almost 45% in the week ended April 16, 2016. CNI transported ~5,000 railcars of coal and petroleum coke in the same week, compared to 9,000 units in the corresponding week in 2015.
However, only 5% of CNI’s total revenue in 2015 came from coal transportation. In addition, coal’s contribution to the company’s total carloads was a mere 8% in 2015. Thus, this fall, though significant, won’t matter very much for investors in CNI’s stock.
CNI is well positioned to avert coal headwinds compared to its archrival Canadian Pacific (CP) and its US peers such as Norfolk Southern (NSC), CSX Corporation (CSX), Union Pacific (UNP), Genesee and Wyoming (GWR), and Kansas City Southern (KSU).
All US-born Class I railroads make up the portfolio holdings of the WisdomTree Earnings 500 ETF (EPS).
The frontrunners and the laggards
In the week ended April 16, 2016, the major leading commodity groups were as follows:
- lumber and wood products
- primary forest products
- food and kindred products
- non-metallic minerals
- stone, clay, glass
The commodity groups in the red zone were pulp and paper products, petroleum and chemicals, chemicals, petroleum products, metallic ores, iron and steel scrap, and grain.
For more information on the last week’s rail traffic, visit Market Realist’s Week Ended April 9: North American Rail Traffic, Intermodal Slump. In the next part, we’ll analyze the intermodal traffic of Canadian National Railway.