Canadian Pacific’s carloads

Canadian Pacific’s (CP) total carloads rose 1.5% in the week ended January 21, 2017. The company hauled more than 29,000 railcars that week, compared with ~29,000 in the corresponding week of 2016. CP’s railcars, excluding coal, rose slightly to settle at ~24,500 units in the third week of 2017, compared with ~24,600 railcars in the week ended January 23, 2016.

Coal Volumes Fall, Canadian Pacific’s Carloads Rise

Canadian Pacific normally receives 70% of its revenue from Canada and 30% from the United States. CP’s coal carloads fell 6.8% to 5,100 railcars, similar to the fall reported by rival Canadian National (CNI) in the third week of 2017.

Why coal carloads matter to CP

Coal accounted for 11% of Canadian Pacific’s (CP) revenue and 12% of its carloads in 2016. The company mainly transports metallurgical coal meant for exports through Metro Vancouver’s port. Its coal traffic in Canada begins primarily at Teck Resources’ (TCK) mines in southeastern British Columbia.

For the past year, coal’s production and demand have been under pressure due to depressed prices, environmental concerns, and a shift from coal-fired power plants to natural gas-based electricity generation. US steel producers’ capacity utilization didn’t see a marked improvement in the recent quarter either. All US-born Class I railroads (UNP) are included in the portfolio holdings of the WisdomTree Earnings 500 ETF (EPS).

Commodity groups

In the week ended January 21, 2017, the major advancing commodity groups were as follows:

  • Canadian and US grain
  • potash
  • metals, minerals, and consumer products

The major commodity groups that reported declines were the following:

  • fertilizers and sulfur
  • forest products
  • chemical and plastics
  • crude
  • automotive

In the final part of this series, we’ll take a look at the changes in Canadian Pacific’s intermodal traffic.

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