Canadian Pacific’s carloads
Canadian Pacific (CP) registered a fall of 4.5% in total railcars in the week ended July 30, 2016. The company hauled more than 29,000 railcars in the same week, as compared to ~31,000 railcars in the corresponding week of 2015. CP’s railcars excluding coal declined by 9% and settled at more than 23,000 units, as compared to 26,000 in the corresponding week of 2015.
Notably, the company received 70% of total revenues from Canada in 2015, whereas 30% came from the US. In sharp contrast with rival Canadian National (CNI), CP’s coal carloads actually rose by 17.6% in the week ended July 30.
Why coal carloads matter to CP
Coal accounted for 10% of CP’s revenues and 12.3% of CP’s carloads in 2015. CP’s transports of metallurgical coal are generally meant for export through the Vancouver port. Its coal traffic in Canada begins primarily from Teck Resources’ (TCK) mines in southeastern British Columbia.
During the past year, coal production and demand have been under pressure due to depressed prices, environmental concerns, and the shift of coal-fired power plants to natural-gas-based electricity. US steel producers’ capacity utilizations did not see any marked improvements in 2Q16 either, though TCK has issued a slightly high production guidance for 2016. If this goes according to plan, we should see either more coal hauling by CP in 2016 or less contraction in the company’s coal volumes as compared to peers.
Frontrunners and backbenchers
Commodity groups including Canadian grain, US grain, potash, and forest products gained during the reported week of July 30, 2016. But fertilizer and sulfur, chemicals and plastics, crude, metals and minerals, and automotive declined that week.
In the next and final part, we’ll analyze Canadian Pacific’s intermodal traffic.