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Why BNSF Railway Posted a Robust Rise in Its Week 13 Freight Volumes

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Freight volumes of BNSF Railway

BNSF Railway (BRK-B) operates in the Western United States and competes primarily with Union Pacific (UNP). BNSF Railway’s total railcars for the week ended April 1, 2017, rose 15.6% YoY (year-over-year) to ~96,000 units, compared with ~83,000 units in the corresponding week of 2016.

Carloads other than coal and coke rose 5.9% YoY to ~60,000 units in the week ended April 1, 2017. In percentage terms, BNSF Railway recorded a robust rise in overall volume that was much higher than the overall percentage rise reported by US railroads.

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Why coal matters to BNSF

BNSF Railway saw its coal and coke freight volumes rising to 31.2% YoY in the 13th week of 2017, which was slightly higher than the rise reported by rival UNP. In 2015, coal transportation contributed nearly 22.0% of freight revenues for Berkshire Hathaway’s BNSF, the largest US Class I railroad company.

About 90.0% of that coal originates from the Powder River Basin in Wyoming and Montana. Major coal producers operating in the area include Alpha Natural Resources (ANR) and Peabody Energy (BTU). Environmental concerns and competition from natural gas (UGAZ) are hampering incremental coal shipment prospects for coal producers (ARLP) in 2017.

Commodity groups

The commodities that rose in the week ended April 1, 2017, were as follows:

  • grain
  • sand and gravel
  • iron and steel scrap
  • waste and scrap
  • metallic ores

The commodities that fell were as follows:

  • chemicals
  • metals
  • pulp and paper

In the next part of this series, let’s look at BNSF Railway’s intermodal traffic.

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