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Double-Digit Fall in Intermodal Rail Traffic Raises Concerns

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US weekly railcar units

Every Wednesday morning, the AAR (Association of American Railroads) releases rail traffic data for the previous week. The latest report is for the week ending March 26, 2016. For the same week, the total US railcar units fell to 232,000, reflecting a significant drop of 18.5% from 285,000 units in the week ending March 28, 2015.

US intermodal traffic declined by just more than 14% to 237,000 units in the week ending March 26, 2016, from 278,000 units during the corresponding week in 2015. Intermodal volumes declined by a higher percentage compared with the previous week.

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Canadian and Mexican rail traffic

In line with US rail traffic, Canadian rail traffic declined by double digits. Canadian railroads recorded a decline of 13.8% in railcar units in the week ending March 26, 2016, compared with the corresponding week in 2015. The Canadian railroads’ intermodal units also reported a fall of 18.7% compared with the corresponding period in 2015.

In the week ending March 26, 2016, Mexican railcar units fell by a sizable 25.1%. Intermodal traffic also fell by 34.8% during the same week compared with week ending March 28, 2015. The huge fall in Mexican railroad’s intermodal traffic is noteworthy.

Out of ten carload commodity groups, only two reported a rise: motor vehicles and parts and miscellaneous railcar units. The weekly losers were coal, down by 37.8%, followed by petroleum products and grain.

North American freight traffic 

There are 13 railroads that submit weekly data. These carriers handle about 95% of US and Canadian freight traffic. Class I railroads account for a lion’s share of freight rail movement. These are BNSF Railway (BRK-B), Union Pacific (UNP), Norfolk Southern (NSC), CSX (CSX), Kansas City Southern, Canadian Pacific Railway (CP), and Canadian National Railway (CNI).

Investors interested in diversified exposure to the rail industry can opt for the WisdomTree Earnings 500 Fund (EPS). All the US Class I railroads are part of the ETF.

For information on the previous week’s rail traffic, read US and Canadian Rail Traffic Slumps, Mexican Railroads Shine.

In this series, we’ll take a look at all US Class I railroad carriers’ traffic for the week ending March 26, 2016.

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