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How Canadian Pacific’s Railcar Traffic Trended in Week 3

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Canadian Pacific’s railcar traffic

In terms of railcar traffic, Calgary-based railroad Canadian Pacific Railway (CP) and BNSF Railway (BRK.B) remained the sole exceptions in the third week of 2018. Aside from these railroads, the other Class I railroads posted overall volume losses during the week.

In the week ended January 20, 2018, CP registered a 7.5% rise in its carload traffic. However, rival Canadian National Railway (CNI) lost 8.8% during the same week.

Canadian Pacific Railway’s (CP) carloads totaled ~31,700, higher by 2,200 carloads from ~29,500 carloads hauled in the week ended January 21, 2017. The company’s volume growth was in sharp contrast with the decline posted by both US and Canadian railroads in the third week of 2018.

For Canadian Pacific Railway, carloads excluding coal comprised 81.9% of total carloads, slightly down from 82.7% in Week 3 of 2017. The company reported 6.5% growth in these carloads from ~24,400 in 2017 to ~26,000 carloads in 2018.

CP’s coal carloads comprised 18.1% of the total carloads, up 0.8% from 17.3% in last year’s third week. Coal traffic shot up 12.2% in 2018 to 5,700 units from ~5,100 units in the third week of 2017.

With an improved coal production outlook for Canadian coal producers in 2018, the prospects of higher coal transportation have increased for Canadian railroads.

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Changes in commodity groups

Except for forest products and automotive, all other carload commodity groups witnessed volume growth for Canadian Pacific Railway in Week 3 of 2018. The commodity groups that reported sharp volume gains were grain, potash (POT), and energy, chemicals (HUN), and plastics.

CP’s intermodal volumes in Week 3

In line with its carload traffic growth, Canadian Pacific Railway reported 11.5% growth in intermodal volumes. In the third week of 2018, CP carried ~20,000 intermodal containers and trailers compared with ~18,000 units in the same week last year.

The overall volume gain of 9.0% for Canadian Pacific was in sharp contrast with the shipment loss reported by US and Canadian railroads.

The first three weeks of 2018 haven’t performed well for the railroad industry. The year still shows promise, however, as industrial production (IYJ) in the US has risen in recent months. The tax reforms in the US should also result in higher capital spending in 2H18.

For ongoing updates on this industry, please visit Market Realist’s Railroads page.

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