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Mexican Railroads Shine as US and Canadian Railroads Slump

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US weekly railcar units

Every Wednesday morning, the AAR (Association of American Railroads) releases the weekly rail traffic data for the previous week. The latest report is for the week ended April 2, 2016. During this week, the total US railcar units went down to 238,000, a double-digit fall of 14.5% from 278,000 units in the week ended April 4, 2015. In the latest reported week, US intermodal traffic slumped by ~6% to ~254,000 units in the week ended April 2, 2016, from 271,000 units during the same period in 2015.

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Canadian and Mexican rail traffic

In the latest reported week, Canadian rail traffic registered a single-digit decline. These railroads reported a fall of 6.8% in railcar units in the week ended April 2, 2016, compared with the corresponding period in 2015. Canadian freight rail carriers recorded a fall of 9.3% in intermodal traffic in the week ended April 2, 2016, compared with the corresponding period in 2015.

Last week, Mexican railroads offered a positive surprise regarding rail traffic. Mexican railcar units and intermodal traffic were up by 10.7% and 35.7%, respectively. The intermodal volumes of Mexican railroads have seen a sharp rise in comparison to the fall in US and Canadian intermodal volumes.

Three out of ten carload commodity groups posted volume growth in the week ended April 2, 2016. These are grains, chemicals, and miscellaneous railcar units. The weekly backbenchers were coal, down by ~40%, followed by petroleum products and motor vehicles and parts.

North American freight traffic 

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

Investors interested in dividend ETFs can opt for the Vanguard Dividend Appreciation ETF (VIG). All US Class I railroads are part of VIG.

For more information on the last week’s rail traffic, visit Market Realist’s weekly rail traffic. In this series, we’ll take a look at all US Class I railroad’s rail traffic for the week ended April 2, 2016.

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