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Kansas City Southern: Intermodal Weakness Hurt Its Rail Traffic

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Jun. 24 2019, Published 9:52 a.m. ET

Rail traffic fell

Kansas City Southern’s (KSU) rail traffic fell 1.6% in Week 24. The company hauled 45,481 units during the week—compared to 46,204 units in Week 24 of 2018. Six out of seven Class I railroad companies recorded lower volumes during the week. Union Pacific (UNP) registered the highest fall of 6%. Canadian Pacific Railway (CP) was the only volume gainer with traffic growth of 0.8%.

Weakness in intermodal volumes led to a decline in Kansas City Southern’s overall rail traffic. The company’s intermodal volumes fell 6.2% YoY to 19,920 units from 21,241 units in Week 24 of 2018. Six of the seven Class I railroad companies recorded lower intermodal volumes during Week 24. CSX (CSX) registered the highest fall of 11.5%. Canadian Pacific Railway was the only volume gainer with a rise of 5.8%.

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Carload traffic improved

Kansas City Southern’s carload traffic grew 2.4% YoY to 25,561 railcars from 24,963 railcars. Four of the seven Class I railroad companies recorded lower carload traffic in Week 24. Union Pacific registered the highest fall of 5.1%. Apart from Kansas City Southern, CSX recorded carload volume growth of 3.3%. Canadian National Railway (CNI) reported a flat volume in Week 24.

Kansas City Southern’s carload traffic for commodities, excluding coal and coke, grew 0.9% YoY to 21,598 units from 21,410 units. The company’s coal and coke traffic grew 11.5% YoY to 3,963 railcars from 3,553 railcars.

The company recorded volume growth across grain, coal, food, chemicals, petroleum, and motor vehicles and equipment commodities. Kansas City Southern’s metallic ores, farm, grain mill, metals, and iron and steel products’ volumes fell YoY.

Kansas City Southern stock has returned 25.2% YTD (year-to-date). The stock has outperformed the returns of the SPDR S&P Transportation ETF (XTN), which invests in US transportation companies. XTN has allocated 42.8% of its funds to the freight and logistics services industry. XTN has gained 12.7% YTD.

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