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Huge Rise in Coal Boosts BNSF Railway’s Carloads

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BNSF Railway’s carloads

BNSF Railway (BRK-B) operates in the western United States and competes with Union Pacific (UNP). Its total railcars for the week ended January 21, 2017, rose 8.1% YoY (year-over-year) to over 97,000 units, compared with ~90,000 units in the corresponding week of 2016.

Carloads, other than coal and coke, rose very slightly to over 56,000 in the week ended January 21, 2017. The percentage rise in BNSF Railway’s overall carloads was slightly lower than the percentage increase reported by US railroads overall.

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Why coal matters to BNSF

BNSF Railway’s coal and coke railcars rose 21.4% in the week ended January 21, 2017, on a YoY basis. However, rival UNP’s rose 8.9%. Coal transportation contributed nearly 22% of freight revenue in 2015 for Berkshire Hathaway’s BNSF, the largest US Class I railroad.

Nearly 90% of its coal originates from the Powder River Basin in Wyoming and Montana. Major coal producers operating in that area include Alpha Natural Resources (ANR) and bankruptcy-declared Peabody Energy (BTU). Overall, environmental concerns and competition from natural gas (UGAZ) hampered incremental coal shipment prospects for coal producers (ARLP) in 2016.

Progressing and regressing commodity groups

The main front-runner commodities for the week ended January 21, 2017, were as follows:

  • iron and scrap
  • motor vehicles
  • chemicals
  • farm (excluding grain)

Commodities that witnessed backward movement included the following:

  • metallic ores
  • forest products
  • metallic ores
  • petroleum products

In the next part, we’ll look at BNSF Railway’s intermodal traffic.

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