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Strong Rise in Coal Volumes Failed to Push up CSX’s Carloads

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CSX’s carloads

In the week ended December 17, 2016, CSX’s (CSX) overall carloads fell 2.3% from the week ended December 19, 2015. In the week in 2016, the company hauled over 71,000 railcars, against nearly 73,000 in the corresponding week last year. Its carloads, excluding coal and coke, fell 8.2%, in line with Norfolk Southern’s (NSC) volumes in the same category.

On an overall basis in the reported week, CSX’s percentage fall in railcar volumes was in tune with the 2.8% fall reported by US railroads. 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

Like NSC, CSX’s coal plus coke railcar volumes rose substantially, by 18.9%, in the week ended December 17, 2016. Coal accounted for 13.2% of CSX’s total volumes and 17.2% of its total revenue in 3Q16.

According to the EIA’s (U.S. Energy Information Administration) December 6, 2016, forecast, US coal output is expected to fall 15.0% in 2016, which would be the lowest level of coal production since 1978. However, the EIA predicts a 2.0% rise in 2017 coal production.

Eastern railroads have cited a shift from coal to natural gas (UNG) in electricity generation plants as one of the reasons for the fall in utility coal transportation. The coal tsunami has affected major US coal producers such as Alliance Resource Partners (ARLP), Consol Energy (CNX), and bankruptcy-declared Peabody Energy (BTU).

The bull and bear commodity groups

Commodity groups that posted a significant rise in the week ended December 17, 2016, are as follows:

  • non-metallic minerals
  • iron and steel scrap
  • waste and non-ferrous scrap

Laggard commodity groups are as follows:

  • metallic ores
  • primary forest products
  • primary metal products
  • petroleum products

We’ll look at CSX’s intermodal traffic in the next part.

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