Kansas City Southern’s carloads
In the week ended April 8, 2017, Kansas City Southern’s (KSU) total railcars rose 9.0% compared to the corresponding week of 2016. In the reported week, Kansas City Southern hauled well over 23,000 railcars compared to nearly 22,000 units in the week ended April 9, 2016. Carloads other than coal and coke rose an impressive 88.0% YoY (year-over-year).
KSU’s recent growth in coal and coke carloads has been phenomenal. The company’s coal and coke carloads rose a staggering 88.0% in the 14th week of 2017. The company hauled ~3,700 railcars of coal and coke compared to nearly 2,000 carloads in the corresponding week of 2016.
If you want to compare this week’s freight volume data with the previous week’s data, check out Market Realist’s Week 13: US Freight Rail Volumes on a Growth Trajectory.
Are coal carloads vital to KSU?
Utility coal, other coal, and petroleum coke accounted for 9.0% of KSU’s total revenues in 2016. The share of these commodities’ carloads out of its total carloads was 11.7% in 2016. Although that percentage may not seem significant, it’s noteworthy, given KSU’s small scale of operations.
Kansas City Southern moves coal originating in the Powder River Basin in Wyoming and the US Midwest. Coal producers operating in the region, which include Alpha Natural Resources (ANR) and Peabody Energy (BTU), witnessed 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 April 8, 2017, the following commodity groups rose:
- motor vehicles and equipment
- chemical and products
- petroleum products
- metal and products
Major commodities that fell during the week include the following:
- crushed stone, sand, and gravel
- metallic ores
In the next part, we’ll focus on KSU’s intermodal volumes.