Norfolk Southern’s carloads
Norfolk Southern (NSC) and CSX (CSX) run a virtual duopoly in the eastern United States. In the week ended January 28, 2017, NSC’s overall railcar volumes grew 10.4%. There were over 71,000 railcars, compared with ~65,000 in the week ended January 30, 2016.
Railcar volumes, excluding coal and coke traffic, rose 2.4% in the reported week of 2017 on a YoY (year-over-year) basis. The boost to NSC’s overall carloads in the fourth week of 2017 came from coal volumes. If you want to compare this week’s freight volume data with the previous week’s, read Tracking Freight Rail Traffic for the Week Ended January 21.
Why coal matters for NSC
NSC’s coal and coke traffic (ARLP) rose 33.6% in the week ended January 28, 2017. Investors should note that coal (CNX) made up ~15% of the company’s 2016 revenue, falling from 23% in 2009. However, recent trends in coal prices have kindled the hopes of coal producers.
NSC expects to handle 17 million–19 million tons of utility coal per quarter in 2017. The company assumes weather-related normalizations in the utility coal segment. Similarly, it anticipates handling 3.5 million–4.5 million tons of export coal in 2017 on a quarterly basis. The tightening of the international coal supply along with better seaborne pricing will most likely boost export coal tonnage over the next four quarters.
Leaders and laggards
In the week ended January 28, 2017, advancing commodity groups were as follows:
- crushed stone, sand, and gravel
- grain mill products
- metals and products
- waste and scrap material
- non-metallic minerals
The major laggards in the same week were the following:
- motor vehicles and equipment
- petroleum products
In the next part, we’ll look at NSC’s intermodal traffic for the week ended January 28, 2017.