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How Canadian Pacific’s Carloads Compare to Rival CNI’s

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Oct. 4 2016, Updated 8:04 a.m. ET

Canadian Pacific’s carloads

Canadian Pacific (CP) registered a fall of 4.1% in total railcars in the week ended September 24, 2016. The company hauled 32,000 railcars in the week, compared to more than 33,000 railcars in the corresponding week in 2015.

Even CP’s railcars excluding coal fell 4.8% to settle at over 26,000 units in the latest reported week of 2016, compared to ~28,000 units in the corresponding week in 2015. In sharp contrast to the 8% rise reported by rival Canadian National (CNI), CP’s carloads reported a fall in the week ended September 24, 2016.

The company received 70% of its revenue from Canada and 30% from the United States in 2015. CP’s coal carloads rose marginally in the week ended September 24, 2016, in contrast to the sharp fall of 18.6% reported by rival Canadian National.

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Why coal carloads matter for CP

Coal accounted for 10% of CP’s revenue and 12.3% of its carloads last year. By and large, CP transports metallurgical coal meant for export through Metro Vancouver’s port. Its coal traffic in Canada begins primarily at Teck Resources’ (TCK) mines in southeast British Columbia.

In the last year, coal production and demand have been under pressure due to depressed prices, environmental concerns, and the shift of coal-fired power plant electricity generation to natural gas–based electricity generation. Even US steel producers’ capacity utilizations haven’t seen marked improvements in the recent quarter. However, TCK has issued slightly high production guidance for 2016 compared to last year.

If all goes according to plan, we should see either more coal being hauled by CP or less contraction in the company’s coal volumes compared to its peers in 2016.

All US-originated Class I railroad companies are included in the portfolio holdings of the WisdomTree Earnings 500 ETF (EPS).

The frontrunners and the backbenchers

Commodity groups such as Canadian and US grains, forest products, and chemicals and plastics rose in the week ended September 24, 2016. Crude metals and minerals and automotive fell in the same week.

 

In the last part of this rail traffic series, we’ll take a look at Canadian Pacific’s intermodal traffic.

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