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Rise in Coal Volumes Pushed Up CSX’s Carloads in 52nd Week

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CSX’s carloads

In the week ended December 31, 2016, CSX’s (CSX) overall railcar volumes rose 4.3% YoY (year-over-year), compared to the week ended January 2, 2016. In the last week of 2016, CSX hauled ~60,000 railcars, compared to 57,000-plus railcars in the corresponding week in 2015. Its carloads, excluding coal and coke, rose 3.4%, which was in contrast with the fall reported by Norfolk Southern (NSC) in the same category.

Investors interested in a weekly comparison of North American freight rail traffic data can refer to the previous week’s Pre-Christmas Freight Rail Traffic Rides High on Festivities.

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Why coal carloads matter

Like NSC, CSX’s coal plus coke railcar volumes rose 7.5% in the week ended December 31, 2016. Coal accounted for 13.2% of CSX’s total volumes and 17.2% of its total revenues in 3Q16.

According to the EIA’s (Energy Information Administration) forecast on December 6, 2016, US coal output is expected to have fallen 15% in 2016, which would be the lowest level of coal production since 1978. However, the EIA predicts a 2% rise in coal production in 2017.

Eastern railroads have cited a 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).

Bull and bear commodity groups

The commodity groups that posted a significant rise in the week ended December 31, 2016, were as follows:

  • motor vehicles and parts
  • primary forest products
  • farm products (excluding grain)
  • iron and steel scrap

The laggard commodity groups were as follows:

  • metallic ores
  • petroleum products
  • non-metallic minerals
  • grain

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

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