uploads/2016/09/UNP-Carloads-4-1.png

Comparing Union Pacific’s Carloads with the Overall Industry

By

Updated

Union Pacific’s carloads

Union Pacific Corporation (UNP) competes with Berkshire Hathaway owned BNSF Railway (BRK-B) in the western US. In the week ending September 17, Union Pacific’s railcar volumes fell 4% to 97,000 plus units from 101,000 plus units in the same week last year. The railcars, excluding coal and coke, were negligibly down at 71,500 plus units in the latest reported week of 2016. The fall in Union Pacific’s carloads in the week ending September 17, 2016, was slightly lower than the fall in carloads reported by US railroads.

Article continues below advertisement

Why coal carloads matter

In the reported week, Union Pacific’s combined coal (ARLP) and coke carloads fell 13.4% on a year-over-year basis. Union Pacific’s coal revenues fell 22% in 2015. Importantly, coal’s (CNX) share of the company’s revenues was almost 16% in 2015. Union Pacific’s coal revenues depend on coal shipments originating in the southern PRB (Powder River Basin).

According to the US government, PRB production fell over the past few years—mainly due to recession and competition from natural gas. The 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 impacting the coal output.

Advancing and declining commodity groups

Commodities in the green zone in the week ending September 17, 2016, were:

  • grain
  • non-metallic minerals
  • grain mill products
  • waste and non-ferrous scrap

The major commodity groups in negative territory were farm products, except grain, metallic ores, primary forest products, petroleum products, and iron and steel scrap.

In the next part, we’ll discuss Union Pacific’s intermodal traffic in the week ending September 17, 2016.

Advertisement

More From Market Realist