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Analyzing Canadian Pacific’s Carloads in the 9th Week

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Canadian Pacific’s carloads

Canadian Pacific’s (CP) total carloads fell a marginal 0.6% in the week ended March 4, 2017. The company hauled 32,000 plus railcars that week as compared to the ~30,000 in the corresponding week of 2016. CP’s railcars excluding coal rose 9.3% YoY (year-over-year) to settle at ~27,000 units as compared to 24,000 plus railcars in the week ended March 5, 2016.

Canadian Pacific normally earns 70% of its revenue from Canada and 30% from the United States. CP’s coal carloads rose slightly by 3.3% YoY in the ninth week of 2017, whereas Canadian National (CNI) reported a YoY fall of 11.7%.

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Why coal carloads matter to CP

Coal accounted for 11% of Canadian Pacific’s (CP) revenue and 12% of its carloads in 2016. The company mainly transports metallurgical coal meant for exports through Metro Vancouver’s port. Its coal traffic in Canada begins primarily at Teck Resources’ (TCK) mines in southeastern British Columbia.

During the past year, coal’s production and demand have been under pressure due to depressed prices, environmental concerns, and a shift from coal-fired power plants to natural gas-based electricity generation. US steel producers’ capacity utilizations didn’t see a marked improvement in the recent quarter either.

Notably, all US-born Class I railroads (UNP) are included in the portfolio holdings of the WisdomTree Earnings 500 ETF (EPS). If you’d like to compare this week’s freight volume data with the previous week’s, check out Market Realist’s US Freight Traffic Takes the High Rail: Week Ended February 25.

Commodity groups

In the week ended March 4, 2017, the major advancing commodity groups were as follows:

  • US grain
  • potash
  • chemicals and plastics
  • metals, minerals, and consumer products

The major commodity groups that reported declines were the following:

  • Canadian grain
  • crude
  • automotive

In the next and final part of this series, we’ll take a look at the changes in Canadian Pacific’s intermodal traffic.

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