In the week ended April 29, 2017, CSX’s (CSX) overall railcar volumes fell 6.3% YoY (year-over-year). Its freight volume stood at ~69,000 railcars, compared with ~73,000 in the corresponding week last year.
Its carloads, excluding coal and coke, fell 4.7% in the same week. Rival Norfolk Southern’s (NSC) carload business was slightly down during the same period.
CSX’s coal and coke railcar volumes also fell, by 11%. However, Norfolk posted a remarkable rise of 52.0% in the same category. Coal made up 16.5% of CSX’s volumes in 2016, compared with 19.5% a year prior.
Why is coal vital for CSX?
According to the EIA (U.S. Energy Information Administration), in 2016, coal production fell 18.0% from 158.0 MMst (million short tons) to 739.0 MMst, the lowest level of coal produced since 1978. In 2017, a rise in coal-fired electricity generation is expected to lead to a 7.0% rise in total US coal production, or an additional 51.0 MMst. The majority of the rise will likely come from the Western and Central United States.
Eastern railroads have cited electricity generation plants’ overall shift from coal to natural gas (UNG) as one of the main reasons for the fall in utility coal transportation. The shift has affected all major US coal producers, including Alliance Resource Partners (ARLP), CONSOL Energy (CNX), and the bankrupt Peabody Energy (BTU). However, recent coal price trends backed by increased coal transportation could suggest a revival.
Bull and bear commodity groups
The commodity groups that posted significant rises in the week ended April 29, 2017, were the following:
- lumber and wood products
- crushed stone, sand, and gravel
- nonmetallic minerals
The commodity groups that posted major falls were the following:
- metallic ore
- primary metal products
- primary forest products
Next, let’s take a look at CSX’s intermodal volumes in the 17th week of 2017.