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Huge Fall in Coal Traffic Shakes BNSF Railway’s Total Railcars

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BNSF Railway’s total railcars

BNSF Railway (BRK-B) operates in the western United States in direct competition with Union Pacific (UNP). BNSF Railway’s total railcar units for the week ended April 16, 2016, fell by a sizeable 21% to ~81,000 units, compared to 102,000 units in the week ended April 18, 2015.

Excluding coal and coke, BNSF’s other railcars also fell by nearly 3% in the week ended April 16. In the reported week, BNSF’s fall in total railcars was significantly higher than the fall in US railroad railcars. Given the scale of BNSF Railway’s operations, this is notable.

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Why coal matters for BNSF

BNSF Railway’s coal and coke railcars fell by a staggering 44% in the week ended April 16, compared to the corresponding week in 2015. The company transported ~25,000 units of coal and coke in the reported week of 2016, compared to ~45,000 units in the corresponding period of 2015. Coal transportation contributed nearly 22% of freight revenues in 2015.

90% of all BNSF’s coal tons originate from the Powder River Basin of Wyoming and Montana. Major coal producers operating in the area include Alpha Natural Resources (ANR) and Peabody Energy (BTU). These companies have lowered their 2016 coal shipment guidances from 2015 levels. Overall, environmental concerns and competition from natural gas (UNG) have hampered incremental coal shipment prospects for coal producers in 2016.

Rising and falling commodity groups

The leading commodities for the week ended April 16, 2016, were as follows:

  • chemicals
  • motor vehicles
  • pulp and paper
  • lumber and wood

Commodities that witnessed backward movement included grain, metallic ores, metals, and petroleum and forest products.

For more information on 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 look at the details of BNSF Railway’s intermodal traffic.

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