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These Commodity Groups Pushed BNSF Railway’s Carloads

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BNSF Railway’s carloads

BNSF Railway (BRK-B) operates in the Western United States and competes primarily with Union Pacific (UNP). Its total railcars for the week ended February 11, 2017, rose 4.2% YoY (year-over-year) to ~92,000 units, as compared to nearly 89,000 units in the corresponding week of 2016.

However, carloads other than coal and coke shrank 6.2% YoY to ~53,000 in the week ended February 11, 2017. The percentage rise in BNSF Railway’s overall carloads was in tune with 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 22.4% in the week ended February 11, 2017, on a YoY basis. This was almost same with the rise reported by rival UNP. Coal transportation contributed nearly 22% of freight revenue in 2015 for Berkshire Hathaway’s BNSF, the largest US Class I railroad.

Nearly 90% of this 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 February 11, 2017, were as follows:

  • motor vehicles
  • chemicals
  • sand and gravel
  • farm (no grain)
  • pulp and paper products

Commodities that witnessed backward movement included the following:

  • forest products
  • metallic ores
  • grain
  • lumber and wood
  • non-metallic minerals

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

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