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Carloads Volume: Union Pacific versus BNSF Railway

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Union Pacific’s carloads

Union Pacific (UNP) competes with BNSF Railway, owned by Berkshire Hathaway (BRK-B), in the western United States. In the week ended December 17, 2016, UNP’s overall railcars fell 7.5% to 89,000 units from 96,000 units in the corresponding week of 2015.

Railcars, excluding coal and coke, fell 6.7% to around 67,000 units in the reported week of 2016. Although UNP’s overall carloads declined that week, rival BNSF’s total carloads rose 1.1%.

If you’re interested in comparing this week’s traffic data with the previous week’s, you can refer to Freight Rail Traffic for the Week Ended December 10.

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Why coal carloads matter

In the reported week, UNP’s combined coal (ARLP) and coke carloads fell 9.9% on a year-over-year basis. It’s worth noting that UNP’s coal revenue fell ~20.0% in 3Q16. Coal’s (CNX) share of the company’s revenue was almost 15.0% in the same quarter, a fall of 17.2% from 3Q15. UNP’s coal revenue depend on coal shipments originating in the Southern Powder River Basin (or PRB).

According to the EIA (U.S. Energy Information Administration), PRB production has fallen over the past few years, mainly due to the recession and competition from natural gas. PRB coal output is expected to fall significantly in 2016 for the first time since 1998. Competition from natural gas (UGAZ) resulting from reduced natural gas prices has been one of the main factors affecting coal output recently.

Advancing and declining commodity groups

Commodities that were in the green zone in the week ended December 17, 2016, were as follows:

  • grain
  • grain mill products
  • metals and products
  • iron and steel scrap
  • pulp, paper, and allied products

Major commodity groups in negative territory were as follows:

  • metallic ores
  • petroleum products
  • non-metallic minerals
  • motor vehicles and equipment
  • farm products (except grain)

If you’re interested in railroad stocks, you can get more information on US Class I railroads on Market Realist’s Railroads page. In the next part, we’ll assess the position of UNP’s intermodal traffic in the week ended December 17, 2016.

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