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How Do Union Pacific’s Carloads Compare with Industry Volumes?

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Union Pacific’s carloads

Union Pacific (UNP) competes with Berkshire Hathaway’s BNSF Railway (BRK-B) in the Western United States. In the week ended July 23, UNP’s total railcars declined by 6.3% to 94,000 units from ~100,000 units in the corresponding week of 2015. Railcars excluding coal and coke fell by 2.3%, and the fall in UNP’s other-than-coal volumes was on par with the fall reported by BNSF.

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Why coal carloads matter

For the week ended July 23, 2016, UNP’s combined coal (ARLP) and coke carloads fell by nearly 16.4% on a YoY (year-over-year) basis, and the company’s coal revenues tanked by 22% YoY. Coal’s (CNX) share of UNP’s revenues was almost 16% in 2015. Notably, UNP’s coal revenues depend on upon coal shipments originating in the Southern Powder River Basin, or PRB.

According to the US government, PRB production has declined over the past few years, mainly due to the recession and competition from natural gas. PRB coal output is expected to fall significantly in 2016 for the first time since 1998. Competition from natural gas (UGAZ) due to low natural gas prices has been one of the main factors affecting coal output.

Advancing and declining commodity groups

Commodities in the green zone in the week ended July 23, 2016, were:

  • grain
  • non-metallic minerals
  • waste and non-ferrous scrap
  • lumber and wood products

Commodity groups in the negative territory included metallic ores, primary forest products, metals and products, crushed stone, sand and gravel, and metals and products.

You can compare this week’s rail data from the previous week in How Did Rail Traffic Fare in the Week Ending July 16.

In the next part, we’ll assess the position of UNP’s intermodal traffic in the week ended July 23, 2016.

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