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Which Railroad Saw the Highest Revenue Growth in Q2?

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Railroads’ top-line growth

Freight volumes and pricing gains determine a railroad’s revenue growth. The second quarter turned out to be a good quarter for major US railroads’ top-line growth, with three railroads (XTN) reporting double-digit revenue growth. Let’s take a look.

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BNSF Railway saw highest revenue growth

BNSF Railway’s 12% YoY (year-over-year) revenue growth was the highest seen among major US railroads in the second quarter. In the quarter, BNSF’s total revenue rose YoY (year-over-year) to $5.8 billion from $5.2 billion, due to 5.3% volume growth and a 4% rise in average revenue per car.

GWR and NSC followed BNSF

In Q2 2018, Genesee & Wyoming’s (GWR) revenue rose 10.1% YoY to ~$595.0 million from $540.4 million, driven by its Providence and Worcester Railroad and Heart of Georgia acquisitions in 2017. Meanwhile, Norfolk Southern’s (NSC) revenue rose ~10% YoY to $2.9 billion from $2.6 billion, due to 6% YoY volume growth and a 4% YoY rise in revenue per railcar.

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UNP, CP, CNI, and KSU’s revenue growth

In Q2 2018, Union Pacific’s (UNP) revenue rose ~8% YoY to $5.67 billion from $5.2 billion, due to 4% total revenue growth YoY and a 4% YoY increase in average revenue per car. CSX’s Q2 revenue was $3.1 billion—up 5.8% YoY from $2.9 billion. The railroad’s revenue carloads grew 2% YoY, whereas its revenue per unit expanded 4% YoY.

In the second quarter, Canadian Pacific Railway’s (CP) revenue rose 6.5% YoY to 1.75 billion Canadian dollars from 1.6 billion Canadian, mainly due to a 4% YoY rise in revenue ton-miles and 2% YoY carload growth. Canadian National Railway’s revenue was 3.6 billion Canadian, up 9.1% YoY from 3.3 billion Canadian. CNI’s revenue was boosted by a 7% YoY rise in revenue ton-miles and 6% YoY carload growth.

Kansas City Southern’s (KSU) YoY revenue growth of 4% was the lowest among all major railroads in the second quarter. The company’s revenue was $682.4 million, up from $656.4 million in Q2 2017. Its revenue grew due to a 1.0% YoY volume rise and a 3% YoY rise in revenue per car. In the next part, we’ll compare railroads’ second-quarter operating margins.

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