Did Coal Boost CSX’s Carloads in the Second Week of 2017?

In the week ended January 14, 2017, CSX’s (CSX) overall railcar volumes rose 3.1% YoY (year-over-year). In the second week of 2017, CSX hauled over 68,000 railcars, compared with over 66,000 railcars in the comparable week last year. The company’s carloads, excluding coal and coke, rose 0.8%—a smaller rise than Norfolk Southern’s (NSC). Investors interested in comparing this week’s freight volume data with the previous week’s can read Your Freight Rail Traffic Rundown for the First Week of 2017.

On NSC’s lines, CSX’s coal plus coke railcar volumes rose 11.6% in the week ended January 14, 2017. However NSC’s volumes in the same category, in percentage terms, rose two times more than CSX’s. Coal accounted for 13.2% of CSX’s total volumes and 17.2% of its total revenue in 3Q16.

According to the EIA (U.S. Energy Information Administration), coal production fell 18%, or by 158 MMst (million short tons), in 2016, to 739 MMst, which represents its lowest level of coal produced since 1978. In 2017, growth in coal-fired electricity generation is expected to lead to a 7% rise, or an additional 51 MMst, in total US coal production. The majority of the rise is anticipated to come from the western and interior regions.

Eastern railroads have cited the shift from coal to natural gas (UNG) in electricity generation plants as one of the main 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). Investors with interests in coal can refer to Market Realist’s Key Takeaways from Latest Coal Indicators.

The commodity groups that posted a significant rise in the week ended January 14, 2017, were as follows:

• non-metallic minerals
• grain mill products
• motor vehicles and parts
• waste and nonferrous scrap
• metallic ores

The laggard commodity groups were as follows:

• iron and steel scrap
• petroleum products
• primary forest products
• grain

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