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How Did BNSF’s Carload Decline Compare with the Industry?

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BNSF’s carloads

BNSF Railway (BRK-B) operates in the US West and competing with Union Pacific (UNP). BNSF’s total railcars for the week ended October 22, 2016, fell by 9.1% to ~99,000 units, as compared to ~108,000 units on a YoY (year-over-year) basis.

Carloads other than coal and coke fell 8.3% to ~55,000 railcars in the week ended October 22, 2016, from ~60,000 railcars in the corresponding week of 2015. In the week ended October 22, 2016, the percentage fall in BNSF’s overall carloads was almost double the percentage fall reported by US railroads.

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Why coal matters for BNSF

BNSF Railway’s coal and coke railcars fell 10.2% in the week ended October 22, 2016, on a YoY basis. For UNP, the fall in the same category was 19.1%. For BNSF, the Berkshire Hathaway controlled largest US Class I railroad, coal transportation contributed nearly 22% of freight revenues last year. Notably, 90% of all BNSF’s coal tons originate from the Powder River Basin, or PRB, of Wyoming and Montana.

The major coal producers operating in that area include Alpha Natural Resources (ANR), and Peabody Energy (BTU), which had declared bankruptcy. Overall, environmental concerns and competition from natural gas (UGAZ) have hampered incremental coal shipment prospects for coal producers (ARLP) in 2016. And the trend in coal does not as if it will reverse soon.

Progressing and regressing commodity groups

The main front runner commodities for the week ended October 22, 2016, include:

  • motor vehicles
  • pulp and paper
  • waste and scrap

The commodities that witnessed backward movement include petroleum, metallic ore, forest products, iron and steel scrap, and metals.

In the next part, we’ll go through the details of BNSF Railway’s intermodal traffic.

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