BNSF Railway (BRK-B) operates in the Western US and competes with Union Pacific (UNP). BNSF Railway’s total railcars for the week ended July 9, 2016, fell by 11% to 85,000 plus units compared with 96,000 plus units on a year-over-year basis. Even the carloads excluding coal went down to nearly 51,000 railcars in the week ended July 9, 2016, from ~55,000 railcars in the corresponding week of 2015. BNSF recorded a higher fall in overall railcar traffic compared with UNP in the reported week of 2016.
Why coal matters for BNSF
BNSF Railway’s coal and coke railcars declined 16.3% in the week ended July 9, 2016, on a year-over-year basis. Coal transportation contributed nearly 22% of freight revenues last year. 90% of all BNSF’s coal tons originate from the Powder River Basin (or PRB) of Wyoming and Montana.
The major coal producers operating in that area include Alpha Natural Resources (ANR) and Peabody Energy (BTU). Peabody filed for Chapter 11 bankruptcy protection in the US on April 13. Overall, environmental concerns and competition from natural gas (UGAZ) have hampered incremental coal shipment prospects for coal producers in 2016. It seems that the falling trend in coal isn’t going to reverse soon.
The main front runner in commodities for the week ended July 9, 2016, were:
- motor vehicles
- non-metallic minerals
The commodities that fell included iron and steel scrap, waste and scrap, metallic ores and petroleum, and forest products. You can compare this week’s rail data with data from the previous week in Why Freight Rail Traffic Rose in the Week Ending July 2. For more information on major US railroad (XLI) stocks, visit Market Realist’s railroads page.
In the next part, we’ll go through the details of BNSF Railway’s intermodal traffic.