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Norfolk Southern’s Carloads Compared to the Industry

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Nov. 20 2020, Updated 1:20 p.m. ET

Norfolk Southern’s carloads

Norfolk Southern (NSC) and CSX (CSX) virtually run a duopoly in the Eastern United States. In the week ended December 10, 2016, NSC’s overall railcars fell 4.2%. Total railcars were ~66,000 compared to 69,000 in the corresponding week last year.

Railcars, excluding coal and coke traffic, fell 3.0% that week on a year-over-year basis. NSC’s fall in railcars was almost equal to the fall reported by US railroads in the same category.

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Why coal carloads matter to NSC

It’s worth noting that coal (CNX) formed 15.0% of Norfolk Southern’s (NSC) 3Q16 revenues, falling from 23.0% in 2009. NSC’s coal and coke traffic (ARLP) fell 7.3% in the week ended December 10, 2016. On a year-to-reported-week basis, coal carloads fell 17.6%.

However, in its 3Q16 conference call, NSC stated that the warm summer and sequential rise in natural gas prices reduced the contraction in its utility coal volumes. The company expects higher stockpiles to be a hindrance to the rise in coal carloads going forward.

Railroads (UNP) make up part of the industrial sector. If you’re seeking exposure to transportation and logistics, you can invest in the iShares US Industrials (IYJ). Major US railroads make up 5.6% of the portfolio holdings of IYJ.

Leaders and laggards

In the week ended December 10, 2016, the following were the advancing commodity groups:

  • grain
  • iron and steel scrap
  • metals and products
  • waste and scrap material

The major laggards in the same week were the following:

  • petroleum products
  • chemicals
  • petroleum products
  • crushed stone, sand, and gravel

To compare this week’s traffic data with the previous week, take a look at Freight Rail Traffic for the Week Ended December 3.

For more information on US major railroad stocks, visit Market Realist’s railroads page.

In the next part, we’ll look at NSC’s intermodal traffic for the week ended December 10, 2016.

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