uploads///NSC Carloads

Coal Takes a Toll on Norfolk Southern’s Carloads

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Sep. 26 2016, Published 9:48 a.m. ET

Norfolk Southern’s carloads

Norfolk Southern’s (NSC) overall railcars witnessed a fall of 4.5% in the week ending September 17, 2016. The total railcars were 69,000 in the same week—compared to nearly 72,000 plus units in the same week last year. The railcars, excluding coal and coke traffic, fell ~1% in the reported week of 2016 on a year-over-year basis. The fall in Norfolk Southern’s total railcars was in line with the fall reported by the US railroads in the week ending September 17, 2016.

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Why coal carloads matter for NSC?

Norfolk Southern’s coal and coke traffic (ARLP) fell 12.5% in the week ending September 17, 2016. CSX, Norfolk Southern’s rival, fell 16.7% in the reported week of 2016. Norfolk’s coal and coke traffic in the latest reported week of 2016 formed 28.4% of total railcars—compared to 31.0% in the previous year. Investors should note that coal (CNX) formed roughly 17% of the company’s 2015 revenues—compared to 23% in 2009.

Railroads (UNP) make up part of the industrial sector. Investors seeking exposure to transportation and logistics can invest in the iShares US Industrials ETF (IYJ). IYJ’s portfolio has 5.5% holdings in major US railroads.

Leaders and the laggards  

In the week ending September 17, 2016, the advancing commodity groups were:

  • crushed stone, sand, and gravel
  • food and kindred products
  • metals and products
  • non-metallic minerals

The major laggards in the same week were grain mill products, grain, motor vehicle and equipment, petroleum products, as well as pulp, paper, and allied products.

Read Your North American Freight Rail Update: Week Ending September 10 to compare this week’s rail data with the previous week.

In the next part, we’ll discuss NSC’s intermodal traffic for the week ending September 17, 2016.

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