uploads///UNP Carloads

What’s behind Union Pacific’s Rise in Freight Volumes?

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UNP’s freight volumes in week 30

Union Pacific (UNP) along with Berkshire-Hathaway-owned BNSF Railway (BRK-B) dominates the Western US freight rail market. The change in these railroads’ freight traffic gives investors a sense of US economic activity.

In the week ended July 29, 2017, Union Pacific saw a 1.3% decline in its overall freight volumes (excluding intermodal). The company hauled ~96,000 railcars in week 30 of 2017 against 97,000 plus railcars in the corresponding week last year. UNP’s railcars sans coal fell 1.4% in the reported week to 70,000 against 71,000 in the same week of 2016. In the first 30 weeks of 2017, the railcar slump registered by Union Pacific was in line with the fall recorded by US railroads overall.

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Union Pacific’s coal (CNX) and coke railcars slid 1% in week 30. UNP’s coal and coke railcar volumes were around 26,000 carloads in the week ended July 29, 2017. In contrast with Union Pacific’s decline in coal carloads, rival BNSF Railway registered a 1.5% rise in the same category in the reported week.

UNP’s intermodal traffic

Like BNSF Railway, Union Pacific registered a 3.3% growth in intermodal volumes. However, note that BNSF’s percentage rise in the same category was in the double digits. In the week ended July 29, 2017, UNP’s container and trailer volumes were ~75,000 compared with 73,000 units in the week ended July 30, 2016.

For Union Pacific, container volumes usually exceed 95% of total intermodal volumes. Container traffic was up 3.2% to 73,000 containers against ~70,000 units in the 30th week of 2017. Trailer traffic gained 7.6% to around 3,000 units in week 30 of 2017.

ETF option

Transportation stocks could go up in the coming quarters amid an improved freight volume scenario. Investors interested in logistics stocks can consider the iShares US Industrials ETF (IYJ). Key airlines (JBLU) and railroads make up 4.6% and 5.6% of IYJ’s holdings.

Keep reading to examine BNSF Railway’s (BRK-B) freight traffic.

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