Canadian National’s carloads
For the past few weeks, Canadian National Railway’s (CNI) carloads have been showing a rising trend. In the week ended January 7, 2017, overall volumes rose 1.8% on a YoY (year-over-year) basis. Railcar volumes rose to ~57,000 units from ~56,000 units in the first week of 2016.
CNI’s railcars excluding coal and coke volumes rose 4.3% in the first week of 2017. Overall Canadian railroad volumes rose 10.5%, whereas CNI’s railcar volumes rose slightly.
Is coal important for Canadian National?
Canadian National’s coal including coke carloads fell 17.3% in the first week of 2017. The company moved 5,300 coal and petroleum coke railcars that week, as compared to 6,400 in the comparable week of 2016. The percentage drop in CNI’s coal volumes was almost in tune with the percentage fall reported by Canadian Pacific (CP) in the same category.
It’s worth noting that ~4.0% of CNI’s total revenues in 3Q16 came from coal transportation. Coal’s contribution to the company’s total carloads was a mere 6.7% that quarter. We can surmise that CNI might be better positioned to avert coal’s headwinds than peers Norfolk Southern (NSC), CSX (CSX), Union Pacific (UNP), and Kansas City Southern (KSU).
Transportation sector investors might consider investing in the iShares US Industrials ETF (IYJ). Major US railroads make up 6% of the portfolio holdings of IYJ.
Frontrunners and laggards
In the week ended January 7, 2017, the major advancing commodity groups were as follows:
- food and kindred products
The major commodity groups that reported declines included the following:
- forest products
- petroleum and chemicals
- iron and steel scrap
- waste and scrap materials
In the next part, we’ll take a look at intermodal traffic for Canadian National Railway.