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What Boosted Kansas City Southern’s Carloads in Week 17?

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Kansas City Southern’s carloads

In the week ended April 29, 2017, Kansas City Southern’s (KSU) total railcars rose 24% from the corresponding week of 2016. Kansas City Southern hauled almost 27,000 railcars, compared with nearly 22,000 units in the week ended April 30, 2016. The company’s carloads other than coal and coke rose by an impressive 21.0% YoY (year-over-year).

Kansas City Southern’s recent growth in coal and coke carloads has been phenomenal. The company’s coal and coke carloads rose a staggering 41.0% in the 17th week of 2017. The company hauled ~4,200 railcars of coal and coke, compared with nearly 3,000 carloads in the corresponding week of 2016.

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Are coal carloads vital to Kansas City Southern?

Utility coal, other coal, and petroleum coke accounted for 9.0% of Kansas City Southern’s total revenue in 2016, and 11.7% of its total carloads. Although that percentage may not seem significant, it’s noteworthy given the company’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, including 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 ETF (IYJ). Major US railroad companies make up 6.2% of IYJ’s portfolio.

Rising and falling commodities

In the week ended April 29, 2017, the following commodity groups rose:

  • crushed stone, sand, and gravel
  • metals and products
  • motor vehicles and equipment
  • petroleum products
  • chemical and products

The following commodity groups’ volumes fell:

  • grain
  • farm products
  • food and kinder products

Next, we’ll take a look at Kansas City Southern’s intermodal traffic in week 17.

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