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

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Canadian Pacific’s carloads

Canadian Pacific (CP) registered a fall of 5.4% in its total railcars in the week ended October 1, 2016. The company hauled 32,000 railcars in the week, compared to ~34,000 railcars in the corresponding week in 2015. Even CP’s railcars excluding coal fell 2.4% to settle at over 26,000 units in the latest reported week of 2016, compared to ~27,000 units in the corresponding week in 2015.

CP’s carloads reported a fall, contrasting the 9.6% rise reported by rival Canadian National in the week ended October 1, 2016.

The company received 70% of its revenue from Canada and 30% from the United States in 2015. CP’s coal carloads rose marginally, contrasting the sharp fall of 18.6% reported by rival Canadian National in the week ended October 1, 2016.

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Why coal carloads matter for CP

Coal accounted for 10% of CP’s revenue and 12.3% of its carloads in 2015. CP mostly transports metallurgical coal meant for export through Metro Vancouver’s port. Its coal traffic in Canada begins primarily in Teck Resources’ (TCK) mines in southeast British Columbia.

In the last year, coal (ARLP) production and demand have been under pressure due to depressed prices, environmental concerns, and coal-fired power plants’ shift 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 higher production guidance for 2016 than it did for 2015.

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

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

Frontrunners and backbenchers

Canadian and US grain, forest products, and chemicals and plastics were the commodity groups that rose in the week ended October 1, 2016. Crude products, metals and minerals, and automotive products fell in the same week.

 

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

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