Canadian Pacific’s carloads
Canadian Pacific (CP) registered a fall of 6.8% in total railcars in the week ended July 9, 2016. The company hauled nearly 29,000 railcars in the same week against 31,000 plus railcars in the corresponding week last year. The company’s railcars excluding coal also went down 8.5% to settle just near 23,000 in the latest reported week of 2016.
The company received 70% of its revenues from Canada while 30% came from the US last year. In sharp contrast with rival Canadian National (CNI), CP’s coal carloads were almost unchanged in the reported week of 2016.
Why coal carloads matter for CP
Coal accounted for 10% of revenues and 12.3% of carloads for CP in 2015. CNI reported higher coal burn (volumes) than CP during the week. CP primarily transports metallurgical coal meant for export through Metro Vancouver’s port. Its coal traffic in Canada begins primarily from Teck Resources’ (TCK) mines in Southeastern British Columbia.
In the last year, coal production and demand have been under pressure due to depressed prices, environmental concerns, and the shift from coal-fired power plants to natural-gas-based electricity generation. However, TCK has issued slightly higher production guidance for 2016 compared to 2015. If TCK does indeed increase production, then we should see either more coal hauling by CP in 2016 or less contraction in the company’s coal volumes in the same year compared with rival CNI.
All the US-born Class I railroads are part of the WisdomTree Earnings 500 Fund ETF (EPS).
The commodity groups such as US grains, potash and fertilizer, and automotive were up in the reported week of July 9, 2016. On the contrary, volumes of Canadian grain, forest products, chemicals and plastics, and crude were down in the same week. 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 (IYJ) stocks, visit Market Realist’s railroads page.
In the last part of this rail traffic series, we’ll go through Canadian Pacific’s intermodal traffic.