Week 24: North American Freight Rail Volumes Are on the Rise PART 2 OF 14
Norfolk Southern’s carloads
Norfolk Southern (NSC) and its rival CSX Corporation (CSX) operate in the eastern United States. In the week ended June 17, 2017, NSC’s total railcar volumes rose 2.2% to ~69,000, compared to over 67,000 carloads in the comparable week in 2016.
The company’s total railcars excluding coal and coke witnessed a marginal fall of 0.4% in the reported week of 2017. The rise in NSC’s coal and coke volumes (ARLP) has slowed in recent weeks, but the commodity group expanded its volumes by 9.1% in the week ended June 17, 2017. The rise in coal carloads put smiles back on the faces of railroad companies, including Norfolk Southern.
Coal’s drivers in 2017
Norfolk Southern reports its revenue in three segments: coal, merchandise, and intermodal. Coal’s (CNX) share of the company’s total revenue fell to 15% in 2016 from 23% in 2009.
In a presentation at the Citi Industrials Conference on June 14, 2017, NSC observed that its coal stockpiles remained higher than its target. However, natural gas (UGAZ) prices have started moving upward, which should encourage utilities to use more coal as an electricity source. In fact, Norfolk hinted that its coal volumes were expected to contract sequentially. However, they could still end up being higher year-over-year.
Rising and falling commodity groups
In the week ended June 17, 2017, the rising commodity groups were as follows:
- crushed stone, sand, and gravel
The prominent falling commodity groups were as follows:
- lumber and wood products
- petroleum products
- stone, clay, and glass products
- waste and scrap material
Next, we’ll turn to Norfolk Southern’s intermodal traffic in week 24.