uploads///KSU Carloads

Week 12: Kansas City Southern’s Carloads Growth Compared to Peers

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Apr. 3 2017, Updated 7:37 a.m. ET

Kansas City Southern’s carloads

In the week ended March 25, 2017, Kansas City Southern’s (KSU) total railcars rose 26.6% compared to the corresponding week of 2016. In the reported week, KSU hauled ~24,000 railcars, compared to nearly 19,000 units in the week ended March 26, 2016. Carloads other than coal and coke also rose an impressive 20.0% YoY (year-over-year).

KSU’s coal and coke carloads growth has been remarkable in recent weeks. Its coal and coke carloads rose a staggering 76.0% in the 12th week of 2017. It hauled ~4,000 railcars of coal and coke, compared to nearly 2,300 carloads in the corresponding week of 2016.

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Are coal carloads vital to KSU?

Utility coal, other coal, and petroleum coke accounted for 9.0% of KSU’s total revenue in 2016. The share of these commodities’ carloads against its total carloads was 11.7% in 2016. Although that percentage may not seem significant, it’s worth noting, given KSU’s small scale of operations.

The company moves coal from the Powder River Basin in Wyoming and coal mined in the Midwest. Coal producers operating in the region, which include Alpha Natural Resources (ANR) and Peabody Energy (BTU), anticipated weak coal shipments in 2016. Black Hills (BKH) operates in the same region, but it doesn’t produce coal commercially.

Investors interested in the transportation sector could consider investing in the iShares US Industrials (IYJ). Major US railroad companies make up 6.2% of IYJ’s portfolio.

Rising and falling commodities

In the week ended March 25, 2017, the following commodity groups rose:

  • motor vehicles and equipment
  • chemicals and products
  • petroleum products
  • metal and products

Major commodities that fell during the week included the following:

  • grain
  • crushed stone, sand, and gravel
  • metallic ores

In the next part of this series, we’ll focus on KSU’s intermodal volumes.

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