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Genesee & Wyoming’s June Australian Traffic Is on a Steady Rise

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GWR’s Australian traffic in June

Genesee & Wyoming’s (GWR) Australian region’s rail traffic volumes rose 5.4% YoY (year-over-year) in June. The company hauled ~48,500 railcars in the month compared to 46,000 in June 2017. GWR furnishes carload data for its 51.1% owned Australian operations. However, the data pertaining to its Australian operations are presented on a 100% basis.

In the region, railcars other than coal and coke made up 33.8% of total railcars in June. Compared to June last year, these commodity groups accounted for 40.6% of total railcars. In June, railcar traffic excluding coal and coke fell 12.1% YoY to 16,400 units from ~18,700 units in June 2017.

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In GWR’s other regions (except Australia), coal and coke railcars’ share is substantially lower than that of railcars sans coal and coke. However, the company’s Australian operations remain an exception. Coal and coke carloads were 66.2% of GWR’s overall Australian operations in June compared to 59.4% in the same month last year. Coal and coke carloads rose 17.4% YoY to ~32,100 units in June 2018 compared to over 27,300 in June 2017. Coal and coke volumes jumped mainly due to higher spot coal shipments for various customers in the Hunter Valley region.

Changes in GWR’s commodity groups

In GWR’s Australian region, the only commodity group to report a positive volume change apart from coal was minerals and stone. Metallic ore volumes fell 36.3% on account of the planned temporary shutdown of an iron ore mine in October 2017. Agricultural product shipments fell ~20% mainly due to a weak 2017–2018 harvest in South Australia.

ETF discussion

Transportation and logistics stocks could rise due to increased economic activity in the United States and elsewhere. The tax deduction of capex clause in the Tax Cuts and Jobs Act should also boost the prospects of these stocks.

If you’re bullish on transportation stocks, you may want to consider the iShares US Industrials ETF (IYJ). Major US airline companies (DAL) and railroad companies (UNP) (CSX) make up 4.6% and 6.7% of IYJ’s holdings, respectively.

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