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 16, 2016, fell by 1.8% to 99,000 units compared with 100,000 plus units on a year-over-year basis. Surprisingly, the carloads excluding coal went up 6.9% to 60,000 plus railcars in the week ended July 16, 2016, from ~57,000 railcars in the corresponding week of last year. BNSF’s volumes other than coal went up in contrast with rival UNP’s volumes in the same category.
Why coal matters for BNSF
BNSF Railway’s coal and coke railcars declined 13% in the week ended July 16, 2016, on a year-over-year basis. The 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 the coal producers (ARLP) in 2016. It seems the trend in coal isn’t going to reverse soon.
The main front runner commodities for the week ended July 16, 2016, were:
- motor vehicles
- non-metallic minerals
The groups that witnessed backward movement include:
- iron and steel scrap
- waste and scrap
- metallic ores
- forest products
You can compare this week’s rail data with data from the previous week in How Did North American Rail Traffic Fare in Week Ending July 9? For more information on major US railroad stocks, visit Market Realist’s railroads page.
In the next part, we’ll go through the details of BNSF Railway’s intermodal traffic.