In the week ended November 12, 2016, CSX’s (CSX) overall carloads reported a 2.6% fall compared with the week ended November 14, 2015. CSX’s carloads excluding coal and coke fell 3.7% in contrast with Norfolk Southern’s (NSC) small rise in the same category in the week ended November 12, 2016.
CSX was the first among the major US railroads to declare its 3Q16 results. For its 3Q16 results, please read Market Realist’s How Did Eastern US Rail Giant CSX Perform in 3Q16?
Why coal carloads matter
Unlike its rival NSC, CSX’s coal plus coke railcars rose 1.3% in the week ended November 12, 2016. Coal accounted for 13.2% of CSX’s total volumes and 17.2% of its total revenues in 3Q16.
According to the Energy Information Administration’s (or EIA) October 13 forecasts, coal output in the US is expected to fall 26% in 2016—the lowest levels since 2016. The EIA predicts that coal exports could fall an additional 5% in 2017.
The railroads in the Eastern US have cited the shift from coal to natural gas (UNG) by electricity generation plants as one of the reasons for the fall in utility coal transportation. The coal tsunami has affected major coal producers in the US such as Alliance Resource Partners (ARLP) and CONSOL Energy (CNX), as well as Peabody Energy (BTU), which is now in bankruptcy.
The bull and the bear commodity groups
The commodity groups that posted significant gains in the week ended November 12, 2016, were:
- food products
- lumber and wood products
- crushed stone, sand, and gravel
- motor vehicles and parts
The prominent laggard commodity groups were:
- farm products (excluding grain)
- petroleum and petroleum products
- primary forest products
- metallic ores
For a comparison with the previous week’s freight volume data, please refer to Market Realist’s Key Railroads’ Freight Volumes for the Week Ended November 5. Railroad investors can get detailed information on the US’s Class I railroads on Market Realist’s Railroads page.
We’ll look at CSX’s intermodal traffic in the next article.