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Canadian National Railway’s Volumes Rose despite Coal’s Fall

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Dec. 4 2020, Updated 10:52 a.m. ET

Canadian National’s carloads

Since January 1, 2017, Canadian National Railway’s (CNI) volumes have risen the most YoY (year-over-year) among Class I railroad companies. Canadian National’s carloads have risen over the past few weeks.

In the week ended May 13, 2017, Canadian National Railway’s overall volumes rose 12% on a YoY basis. In the week, its railcar volumes rose to 61,000 units, compared to 54,000 units in the comparable week of 2016. Canadian National’s carload volumes rose more than overall railcar volumes in the United States and Canada.

CNI’s railcar volumes excluding coal and coke rose 16% YoY in the 19th week of 2017. Its coke and coal products saw a fall of 21.3% compared to 2016.

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Should we overlook Canadian National’s coal exposure?

Canadian National Railway’s coal carloads including coke fell in the 19th week of 2017. The company moved ~4,600 coal and petroleum coke railcars in the week. The percentage fall in Canadian National’s coal volumes was much lower than the 30% rise reported by rival Canadian Pacific (CP).

Coal revenue made up just 4.0% of CNI’s total operating revenue in 2016. Coal’s contribution to CNI’s total carloads was a mere 6.0% in the year. As a result, Canadian National may be better positioned to avert coal’s headwinds than its peers Norfolk Southern (NSC), CSX Corporation (CSX), and Union Pacific (UNP).

Transportation sector investors may want to consider investing in the iShares US Industrials ETF (IYJ). Major US railroad companies make up 6.2% of IYJ’s portfolio holdings.

Leaders and laggards

In the week ended May 13, 2017, the major rising commodity groups were as follows:

  • chemicals
  • grain mill products
  • crushed stone
  • stone, clay, and glass

The main falling commodity groups were the following:

  • food and kindred products
  • metal products
  • lumber and wood products

In the next article, we’ll take a look at Canadian National Railway’s intermodal traffic in the 19th week of 2017.

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