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Why Did CSX’s Carloads Rise in the Week Ending July 2?

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CSX’s carloads

CSX (CSX) is a major operator in the Eastern US that competes with Norfolk Southern (NSC). In the week ended July 2, 2016, CSX’s carloads excluding coal and coke rose by 1.5%, which was similar the rise NSC saw in the same category. In all, CSX hauled 69,000 plus carloads in the reported week of 2016 against ~68,000 carloads in the week ended July 4, 2015. However, CSX’s rise of 2% in total carloads was only one-third of the rise in total carloads that rival NSC reported.

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Why coal carloads matter

CSX’s coal plus coke railcars went up by 4.5% in the week ended July 2, 2016, which was similar to the rise recorded by Norfolk Southern in the same category. Coal accounted for 16% of CSX’s total volumes and 19% of its total revenues in 2015.

According to the US Energy Information Administration, the Appalachia region’s coal output is expected to fall by 9% in 2016. However, the agency expects total coal production to increase by 2% and stabilize in 2017. CSX mainly connects coal mining operations in the Appalachian mountain region.

The Eastern railroads have cited electricity generation plants’ shift from coal to natural gas as one of the reasons for the fall in utility coal transportation (IYT). The coal tsunami has affected major coal producers in the US like Alliance Resource Partners (ARLP), CONSOL Energy (CNX), and Peabody Energy (BTU). Due to the sharp decline in coal prices, Peabody filed for Chapter 11 bankruptcy protection in the US on April 13.

Rising and falling commodity groups

Commodities that posted major gains for CSX in the week ended July 2, 2016, were:

  • food products
  • motor vehicles and parts
  • waste and non-ferrous scrap
  • iron and steel scrap

The main bear commodity groups were petroleum and petroleum products, farm products, metallic ores, and non-metallic minerals.

You can compare this week’s rail data with data from the previous week in Why the Week Ending June 25 Was a Mixed Bag for Rail Traffic.

All class I railroads’ intermodal volumes have been on a bumpy ride in the last few quarters. We’ll go through CSX’s intermodal traffic in the next article.

For more information on major US railroad stocks, visit Market Realist’s railroads page.

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