Class I Rail Traffic Midyear 2017 Update - It's Time To Shift Focus On Pricing

Summary

• Total Class I rail traffic through June of 2017 was up 5.9 percent with carload and intermodal traffic up 6.8 and 3.9 percent.
• Commodities driving performance continued to include coal, grain, crushed stone, gravel and sand and metallic ores.
• Other key commodities sustaining growth included chemicals, motor vehicles and equipment and metals products.
• Intermodal container traffic continued to improve in June.
• Some core commodities may be approaching peak performance in the short term, investors should start shifting a closer focus on pricing.

Class I total traffic continued to accelerate during June of 2017. Overall, monthly performance was up 5.9 percent versus last year. Compared to last month’s 7.6 percent improvement, this reflected a 170-basis point (bps) decline.

It should be noted that all carload and intermodal unit traffic is reflective of carried railcars. Carried railcars are a combination of carloads and/or intermodal units originated and received. Investors looking for information regarding unique carload and intermodal unit growth should review the weekly rail traffic reports provided by the American Association of Railroads (AAR).

Despite the “double-counting” effect from using carried railcars, this is an important metric since all railroad operators collect revenue for any railcars utilizing any part of their network or equipment. Comparatively, total U.S. and North America originated rail traffic was up 4.5 and 5.7 percent for the first six months of 2017.

Mexico originated rail traffic for the first six months of the year, was down 1.4 percent (a 60-bps improvement from last month), while Canada was up 11.8 percent (a 70-bps improvement). As stated, North America railroad traffic was up 5.7 percent through June 2017. This mirrors the 5.9 percent growth for U.S. and Canada Class I's.

Despite the muted performance during January, total rail traffic has performed near or above 5 percent year over year (YoY) six out of the past eight months. June’s performance reflected the fourth consecutive month with greater than 5 percent results, and the eighth consecutive month of positive growth. Canadian National (NYSE:CNI) continues to be the strongest performer with total rail traffic up 11.8 percent through June; a 60-bps improvement from May.

Canadian National led all Class I's for intermodal units, up 12.3 percent; Kansas City Southern (KSU) has remained the leader for carload units up 11.5 percent through the year. Other performance for total rail traffic was as follows: BNSF (NYSE:BRK.B) 7.5 percent, Kansas City Southern 5.8 percent, Norfolk Southern (NYSE:NSC) 4.9 percent, Canadian Pacific (NYSE:CP) 4.7 percent, Union Pacific (NYSE:UNP) 3.2 percent and CSX (NASDAQ:CSX) 0.9 percent. All Class I's witnessed improved performance during June, with the exceptions being BNSF and Norfolk Southern.

For Class I container traffic YoY, June performance increased by 6.8 percent versus last year, an 80 bps increase from May’s 6 percent. Investors should note that container traffic includes both international and domestic services.

International and domestic container units carried witnessed a strong surge during the last few months of 2016. The start of 2017 has continued to witness more gradual and stable performance. This momentum may last through the summer/early fall.

June reflected the eighth positive month out of the previous nine. The 6.8 percent performance was the highest result for 2017, eclipsing last week. Trailer traffic has now witnessed four consecutive months of positive growth from last year, June’s result declined by 130 bps from May to 6.3 percent.

Class I Rail Operator	Through June Intermodal Traffic	Through June Performance	Containers	Trailers
BNSF	2,570,828	5.0%	5.3%	2.3%
Norfolk Southern	1,980,082	4.4%	3.9%	10.2%
Union Pacific	1,843,433	0.7%	0.9%	-2.4%
CSX	1,400,429	1.4%	1.8%	-7.5%
Canadian National	1,202,322	12.3%	12.3%	-92.0%
Canadian Pacific	482,609	1.6%	1.1%	12.8%
Kansas City Southern	469,333	-1.1%	-1.1%	33.5%

Click to enlarge

Source: Class I websites and personal database, container units carried

To date, Canadian National, BNSF, Norfolk Southern, Canadian Pacific and Union Pacific and CSX have witnessed positive growth for container units carried. Kansas City Southern has continued to lag peers, but has improved. CSX has continued to witness negative trailer units carried. Kansas City Southern’s trailer units carried declined substantially, while Union Pacific was down marginally. It should be noted that Canadian National’s trailer performance is reflective of an immaterial amount of traffic during 2016.

U.S. and Canada Class I carload traffic witnessed sustained strong performance with a YoY increase at 5.1 percent, reflecting a 390 bps decline from May. Carloads carried during 2017 continued to perform substantially stronger than 2016, and recently have eclipsed 2015’s performance. Energy prices continue to display weakness of late, expectations for summer demand to improve prices remains to be seen. While carload performance has been solid all year, a peak may be forming for certain commodities.

June’s performance witnessed a strong decline from May, and reflected the second consecutive month of declines. The trend remains positive as we have now witnessed eight consecutive months of YoY growth. Through the year, all Class I's in the U.S. and Canada have maintained positive carload traffic. CSX continues to lag its peers; a strong focal point remains on the company; the month of June did see some acceleration.

For Class I carload top five commodities, coal continued to sustain improvement as June performance was up 9.9 percent YoY, versus the 17.1 percent gain during May. Performance for Class I's during the month was as follows: CSX 26.3 percent, Norfolk Southern 16.4 percent, BNSF 9.3 percent, Union Pacific 8.5 percent, Canadian Pacific -0.1 percent, Kansas City Southern -3.1 percent and Canadian National at -19.1 percent. Coal may see flat to marginally negative performance beginning as early as mid-July.

Chemicals performance was up 4.8 percent during June YoY, versus the 4.2 performance during May. Performance for Class I's during the month was as follows: Canadian Pacific 17.5 percent, Union Pacific 7.4 percent, BNSF at 3.7 percent, CSX 3.1 percent, Canadian National 2.6 percent, Kansas City Southern 1 percent, Norfolk Southern at -2.3 percent. If chemicals can sustain and/or marginally improve, chances are performance will remain near the 5 percent level through 2017.

Class I Rail Operator	Through June Carload Traffic	Through June Performance	Coal	Chemicals	Motor Vehicles & Equipment	Grain	Petroleum
Union Pacific	2,408,742	5.2%	16.9%	4.1%	-6.1%	16.1%	-21.7%
BNSF	2,461,954	10.3%	20.3%	-0.3%	11.7%	11.8%	-14.0%
CSX	1,815,196	0.6%	7.0%	1.1%	-2.0%	-9.4%	-14.6%
Norfolk Southern	1,774,884	5.4%	22.9%	-3.2%	-1.7%	4.6%	-11.3%
Canadian National	1,605,596	11.5%	-17.7%	3.9%	7.1%	19.7%	12.8%
Canadian Pacific	816,934	6.6%	4.0%	9.7%	-19.6%	10.3%	-1.8%
Kansas City Southern	653,041	11.5%	41.8%	1.6%	29.9%	1.9%	16.2%

Click to enlarge

Source: Class I websites and personal database, carloads carried

Motor vehicle and equipment performance declined at -1.1 percent during June YoY, versus a 1.2 percent gain during May. Performance for Class I's during the month was as follows: Kansas City Southern 20.4 percent, Canadian National 8.6 percent, BNSF 7.6 percent, Union Pacific at -3 percent, Norfolk Southern at -3.1 percent, CSX at -7.9 percent and Canadian Pacific at -18.6 percent. If motor vehicle and equipment levels remain near the 43,000 weekly level, there still may be some positive results in the short term. However, by late-August, negative performance may become more consistent.

Grain performance improved, up 5.5 percent during June YoY, versus the 22.6 percent gain during May. Performance for Class I's during the month was as follows: Canadian National 27.4 percent, Canadian Pacific 23 percent, Kansas City Southern at 22.7 percent, Union Pacific 4.5 percent, BNSF -2.4 percent, Norfolk Southern -6.7 percent and CSX at -8.1 percent. Similar to motor vehicle and equipment, grain may experience solid performance in the short term. By late-September and onward, the comparable will be tougher to beat.

Petroleum performance declined by -5.9 percent during June YoY, versus the -6.7 percent decline during May. This marks the fifth time during the previous 18 months that petroleum has performed in negative single digits.

Performance for Class I's during the month was as follows: Canadian Pacific at 26.1 percent, Kansas City Southern 24 percent, Canadian National 17.3 percent, Norfolk Southern at -15.5 percent, CSX at -17.5 percent, Union Pacific at -17.5 percent and BNSF at -20 percent. While there may be some positive weeks in the second half of 2017, marginal negative performance may remain as a majority.

Crushed stone, gravel and sand increased by 29.2 percent during June YoY, versus the 28.1 percent increase during May. This is the sixth consecutive month of double-digit performance versus last year; the fifth with performance greater than 25 percent.

Performance for Class I's during the month was as follows: Canadian Pacific 107.8 percent, Canadian National 65.6 percent, Union Pacific 36.4 percent, BNSF 35.3 percent, Kansas City Southern 30.6 percent, Norfolk Southern 8.2 percent and CSX 1.3 percent. At the current pace, this commodity group is likely to remain as the top performer for 2017, as other major commodities may face weakness in the short term.

Based on the performance by individual Class I's, coal, chemicals, motor vehicles and equipment, grain and crushed stone, gravel and sand have continued to lead the improvement for carload traffic performance. Metals products has also been positive through June up 5.1 percent. As stated, the majority of these commodities may experience higher comparable levels in the short term. Investors should continue to monitor these top six commodity trends as they reflected nearly 68 percent of carload traffic through June.

Through the midyear point for Class I's, rail stocks have remained at elevated levels, leading transports. CSX remains the top performer, up 51.9 percent through July 6^th, and will likely keep this position for the balance of the year. All Class I's continued to outperform the SPDR S&P Transportation ETF (NYSEARCA:XTN), but only Union Pacific has underperformed the SPDR S&P 500 ETF (NYSEARCA:SPY).

Canadian National and Kansas City Southern have emerged as the next two top performers for the year with results at 21.5 and 20.8 percent respectively. These are core holdings in the Lean Long-Term Growth Portfolio (LLGP) as the initial potential expected has been achieved. Trade policy rhetoric remains a risk, but fundamental changes to the North America Free Trade Agreement (NAFTA) remain questionable at best.

Looking at overall Class I rail performance, you have to like Union Pacific as it has greatly lagged peers. The fact that both CSX and Norfolk Southern are trading at higher multiples alone is cause to be thinking about Union Pacific. A price near the $105 or lower level would offer double-digit upside potential, not including the dividend.

The first half of 2017 has been a very strong start for Class I's. After considering the core commodities driving performance through June, there is increasing risk that the back half of 2017 will see softer carload rail traffic. Container demand looks to remain strong through late-October, assuming traffic levels remain consistent. As rail traffic has peaked for some commodities, and is getting closer for more, investors should begin to shift more scrutiny on pricing, as well as trucking industry capacity.

Analyst’s Disclosure: I am/we are long CNI, KSU. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Comments

[mr_cassandra]

Nice article thanks. I bought CNI 1/17/16 , when articles and coverage were talking about downturns in coal traffic and other bad fundamentals for the rails. Also, the zweig breath thrust as well as $nahlr were both down to buy signal levels.
CNI was approx $50 then and is now $80, not counting dividends collected. I tend to be a contrarian, having spent years watch negative coverage at major market bottoms.
Now, If I could just do better at when to sell LOL or maybe never to sell

[Growth Investor1]

Mr_cassandra,

Great buy-in for CNI. Selling, trimming, taking gains, etc. can be tough.

Having a management strategy for this is important in my opinion. I typically set a system where I look to buy one position per year. If justified, I can buy up to four positions (based on opportunistic value disconnects from the market).

If I am so fortunate to have gotten into an overweighted position at the right time, then I can sell the "excess" position for short-term profit. Just by having management strategies does not always lead to perfect results either though. As an example, I am holding some overweight positions this year, due to other potential factors.

Thanks,
James

[mr_cassandra]

Thanks. all the credit for buy ins goes to Marty Zweig, PHD and frequent guest on Rukeysers wall st week, many years ago. (RIP).
He write a book called winning on wall st, which chapter and verse studies on contrarian indicators like the put call ratio (his invention) and I later began to research and study repeating low points in another of his creations, the zweig breadth ratio. Long story condensed, when the it gets below .375, you are at or near a major intermediate term low in the markets, a good point to buy any quality solid stock in your watchlist. Hence my buy on CNI.

[Bbhead]

Excellent analysis. Apparently the doomsday scenario that was assumed by shrinking coal volumes never came to fruition. The railroad companies are masters at weathering adverse business conditions..

[Growth Investor1]

Thanks mydogmore. The coal rally has been solid to this point. However, we may see a flattening in traffic over the short-term.

Thanks,
James

[chrisA23]

Really liked this article because it gives a look at an area not much discussed in SA and the press, rail traffic.
In the future please do another such article but at the top where people put some bullet points please put a point about how much the current situation or trend in rails should weigh on one's decision for buying or selling all of or part of big indexes like S&P500 or DJIA.

An example would be something like saying the 5% rail increase would be consistent in a 2% GDP economy with inclining one to raise GDP forcast to 2.2 for their GDP expectations looking forward 6 months.
I know it is tough to make such a guess but it would be very helpful.
Thanks.

[Growth Investor1]

Thanks for the comments chris. I'll see what I can do.

James

[26982993]

On the frac sand here is a recent industry presentation on the future for frac sand :

the conclusion is more regional sand, sand of lower quality and more sand coupled with less rail volume - however while greater volume and strategies to lower costs are underway - the market this year has seen substantial increases in price , roughly fifty percent at the mine.

However , Until sand mine prices fall , rails will continue to hold or grow volume.

http://bit.ly/2tTSmhv

Also read the recent post by alpha on new five million ton mine in basin. Obviously in a 85 million ton market placing 5 million tons in the basin has an impact on rail volumes. However with the increase in sand per well and the number of horizontal wells the sand usage will grow and the rails will do well.

If the issue is pricing for rails , first unravel the impact of dropping fuel prices and the change in the fuel surcharge. This year rails are benefitting from the lag impact on fuel from last years price changes and in addition the major commodities have little or no alternative to rail. This means if the price including fuel for rail on say frac sand was $35 per ton with $30 in freight and $5 in fuel, the drop in fuel would result in the surcharge being $3 for a new total of $33. Upon contract expiration the rails would see a market in which the producers had fifty percent price increases and rail total price declined. Expect rail to raise prices on the freight to charge at least a number that covers the drop in fuel surcharge and more likely take even larger increases on the base.

Each major commodity is different but if the question is frack sand, rails will fair well in this market for the next couple of years. I do not see the same dynamics for coal or autos given the inventory situations and price pressures on the producers.

Rail pricing will continue to do well with the major issue being productivity and rail's ability to capture the falling fuel surcharge on the top line while falling fuel costs flow into the expense side.

There is no shortage of data on rail volumes but the trick is the future. If gas prices are low - coal should suffer (short term inventory changes are a bigger driver), but chemical and fertilizer production should benefit. And met coal is not correlated to domestic natural gas as well as export steam coal.

So watch rail prices but remember they will have the advantage of falling fuel surcharges short term.

[Growth Investor1]

PV,

Thanks, I appreciate the time and information you have provided. Good clarifications and specifics on near-term expectations.

James

[Mad Mary]

PV,

Thanks for the insight into frac sand needs. Here in WI it seems like just about every hill is being leveled to provide sand from the sandstone deposits. Eventually southern WI may look more like Kansas than the rolling hills I grew up with.

Mary

[Herbert Gamache]

Thank you for providing this detailed and comprehensive reporting for 6 class 1 North American railroads/railways. It will help me in managing and future planning for my railroad/railway investments.

[26982993]

It is handled traffic so overhead, originated and received is in the data. It is also carload equivalent data for YOY comparison purposes. The data is rolled up into the twenty classifications by two digit stcc detail. The groupings may not be the same as the individual financial reporting by the railroads. The AAR will report coal as any waybill with an 11 stcc. The rail financial reporting may or may not include things like petroleum coke or synthetic fuels derived from coal burned at power plants which have a 29 stcc in the coal data. In addition rail financial reporting may exclude anthracite coal used for industrial purposes from its reportings. None of these issues are material as to the trends in the data but can cause weekly perturbations in looking at week over week but typically less than holidays and weather disruptions.
The article states fracking sand set a new volume level for the first half. CSX and the NS are up 10% YTD in crushed stone , sand and gravel while the UP is up 20% and the BN is up 30%. Without more granular data it is impossible to tell how much is from drilling sand versus crushed stone or gravel but the stone,clay and glass category is down YTD.
Yes coal is up but in the East it is driven by exports and met coal and in the west it is driven by both gas prices and issues related to inventory changes and capacity and availability issues. The UP is up 17%, BN and NS 20% with CSX 7% on AAR YOY reporting. This compares with the EIA data YTD May 1 of coal generation up just under 7 %.

[Growth Investor1]

Thanks PV,

I think it is generally understood that frac sand is what is driving the crushed stone, gravel and sand commodity category.

I also wrote an article on this, which directly linked the recent Progressive Railroading piece with more detailed commodity break-downs:

https://seekingalpha.c...

If we really want direct information confirming this, we can review earnings transcripts, such as the direct statements from UP's for example:

"Minerals volume increased 32% in the quarter, driven by a 59% increase in frac sand shipments, through increased shale related drilling activity, and profit intensity per drilling well."

"For the remainder of the year, we anticipate continued strength in frac sand shipments as rig counts in our served territory continue to increase."

CP didn't break out percentages, but expressed similar sentiments.

"In the metals, minerals and consumer products area, we performed very well driven not only by our lumber, steel but primarily our frac sand. It moved approximately 17,000 cars of frac sand this quarter and these are levels we haven’t seen since 2014."

"The industry on CP appears bullish and we've got a number of industrial development and capital investment projects underway. We remain optimistic at the frac sand run rate. We’ll continue into Q2 and Q3."

As we all know today, rig counts increased further today, although the Permian Basin and Marcellus and Utica plays declined/remained flat.

If we took all statements from the Class Is for Q1, we get confirming information, granted it still is not perfect (working with data all the time, it is quick to recognize that perfection is not going to become a reality).

I understand that you provide consulting services for the railroad industry and are well-versed in the AAR and Waybill data (likely the proprietary waybill information as well), among others.

It is true that the reported information from Class I websites has its limitations, but through other sources, including management's statements, I feel that it is correct to state that frac sand is the driver for crushed stone, gravel and sand.

There are a lot of ways that investors, and the public in general can get a lot of detailed information (I've used the Waybill data before, but it too has its limitations), EIRs are a great place as well, USDA, seaports, Census, etc., the list goes on. Canada and Mexico also have some great data sets (just takes time to get on the level).

I expect some of the core commodities driving 2017's strong traffic growth to "top-out" in the short-term. This is why investors should be focusing on railroad pricing power (which has been pretty strong of late).

Thanks
James

[ckarabin]

Did I miss the discussion of coal in all this? I need to read it again because coal had been the major depressant on rail traffic and in 2018 it has been coming back quickly. Curious if that tilted these numbers because coal about to decline again with lower nat gas prices

[jimklawyer]

ckarabin, you probably meant *2017* instead of 2018 with respect to "coal...has been coming back quickly".

[Growth Investor1]

ckarabin,

Coal has definitely tilted the positive performance in 2017. Based on carloads carried for all Class Is, coal reflected over 23 percent of the total. Like other commodities including grain, motor vehicles and equipment and petroleum, we may see erratic and/or weakening traffic during the second half of 2017. This is why I think investors need to key on pricing for Class Is.

Intermodal as an example is where Class Is have been able to increase purchased rail transportation costs, while IMC's and trucking carriers have been squeezed from a margin perspective, but still depend on Class I intermodal networks. We are yet to get into a tight trucking environment, where we would expect to see increased pricing for intermodal (although improvements have been occurring).

Similarly, investors need to key-in on management's discussions of pricing for coal, grain, and motor vehicles and equipment.

Thanks,
James

[26982993]

The AAR charges for the data if you need it timely and detailed all in one spot. Each of the major railroads post on their webpage the weekly, YTD performance by twenty classifications on their websites.

Here is the AAR press release on carloads

AAR REPORTS WEEKLY RAIL TRAFFIC FOR JUNE AND THE WEEK ENDING JULY 1, 2017

Washington, D.C. –
July 5, 2017

​The Association of American Railroads (AAR) today reported U.S. rail traffic for the week ending July 1, 2017, as well as volumes for June 2017.

U.S. railroads originated 1,065,976 carloads in June 2017, up 4.4 percent, or 45,174 carloads, from June 2016. U.S. railroads also originated 1,113,575 containers and trailers in June 2017, up 4.6 percent, or 49,425 units, from the same month last year. Combined U.S. carload and intermodal originations in June 2017 were 2,179,551, up 4.5 percent, or 94,599 carloads and intermodal units, from June 2016.

In June 2017, eight of the 20 carload commodity categories tracked by the AAR each month saw carload gains compared with June 2016. These included: coal, up 40,333 carloads or 13.2 percent; crushed stone, gravel, and sand, up 16,747 carloads or 18.5 percent; and chemicals, up 4,888 carloads or 4.1 percent. Commodities that saw declines in June 2017 from June 2016 included motor vehicles and parts, down 7,168 carloads or 9.5 percent; petroleum & petroleum products, down 6,724 carloads or 15.2 percent; and metallic ores, down 2,025 carloads or 7.7 percent.

“Rail traffic indicators of the economy remain mixed. While some commodity groups, such as intermodal, chemicals, and crushed stone and sand (driven heavily by frac sand) set new all-time first half records and a few others like grain and coke set post-recession records, several other traffic categories continue to struggle,” said AAR Senior Vice President John T. Gray. “All of this indicates an industrial economy that may not yet have a clear direction forward and one that continues to undergo structural change. It is a sign of the reality railroads constantly face: changing markets that are difficult to foresee and plan for.”

Excluding coal, U.S. rail carloads were up 4,841 carloads, or 0.7 percent, in June 2017 over June 2016. Excluding coal and grain, carloads were up 3,668 carloads, or 0.6 percent, for the month.

Total U.S. carload traffic for the first six months of 2017 was 6,699,453 carloads, up 6.4 percent, or 404,078 carloads, from the same period last year; and a record 6,892,673 intermodal units, up 2.7 percent, or 179,515 containers and trailers, from last year and up 0.5 percent, or 32,614 units, over the previous record in the first half of 2015.

Total combined U.S. traffic for the first 26 weeks of 2017 was 13,592,126 carloads and intermodal units, an increase of 4.5 percent compared to last year.

Week Ending July 1, 2017

Total U.S. weekly rail traffic was 546,361 carloads and intermodal units, up 3.2 percent compared with the same week last year.

Total carloads for the week ending July 1 were 270,353 carloads, up 2.3 percent compared with the same week in 2016, while U.S. weekly intermodal volume was 276,008 containers and trailers, up 4 percent compared to 2016.

Five of the 10 carload commodity groups posted an increase compared with the same week in 2016. They included coal, up 10.1 percent to 87,750 carloads; nonmetallic minerals, up 9 percent to 39,503 carloads; and chemicals, up 2 percent to 31,851 carloads. Commodity groups that posted decreases compared with the same week in 2016 included petroleum and petroleum products, down 20.8 percent to 8,862 carloads; motor vehicles and parts, down 12 percent to 16,503 carloads; and farm products excl. grain, and food, down 6.1 percent to 16,044 carloads.

North American rail volume for the week ending July 1, 2017, on 13 reporting U.S., Canadian and Mexican railroads totaled 366,143 carloads, up 4.5 percent compared with the same week last year, and 353,457 intermodal units, up 5.9 percent compared with last year. Total combined weekly rail traffic in North America was 719,600 carloads and intermodal units, up 5.2 percent. North American rail volume for the first 26 weeks of 2017 was 18,003,299 carloads and intermodal units, up 5.7 percent compared with 2016.

Canadian railroads reported 79,043 carloads for the week, up 15.1 percent, and 66,334 intermodal units, up 15.6 percent compared with the same week in 2016. For the first 26 weeks of 2017, Canadian railroads reported cumulative rail traffic volume of 3,709,721 carloads, containers and trailers, up 11.8 percent.

Mexican railroads reported 16,747 carloads for the week, down 4.8 percent compared with the same week last year, and 11,115 intermodal units, up 0.04 percent. Cumulative volume on Mexican railroads for the first 26 weeks of 2017 was 701,452 carloads and intermodal containers and trailers, down 1.4 percent from the same point last year.

[ksmith754]

Read this thanks for sharing with everyone.

[Growth Investor1]

Thanks for sharing PVopinion. I provide a link in each monthly article (second paragraph above) to the AAR data as it includes both originated and received information.

James

[Mad Mary]

Very interesting and useful info. Do you have insight into the increase in the sand, gravel, and stone category? Is this a normal spring/summer increase due to road construction or do you believe it to related to fracking pickup?

Mary

[Growth Investor1]

Mad Mary,

I wrote an article formulating some thoughts on this recently:

https://seekingalpha.c...

Thanks,
James

[Mad Mary]

James, thanks that helps a lot. Looks like no one is assuming any increase to a pickup in infrastructure spending.

Mary

[BaitBoy]

Chemicals include all petroleum products? Would like to havs seen breakout of crude oil products shipped.

[Growth Investor1]

BaitBoy,

PV below has alluded to some of the challenges regarding more granular breakouts of certain commodities. It requires a deeper dive and in some cases, is a tough nut to crack.

Generally speaking, petroleum products are not included in chemicals by the 20 commodity classifications reported by Class Is. Petroleum products is its own commodity.

But when looking at each railroad operator, you are correct as in UP includes it within their chemicals segment; others include even more aggregated commodities.

Using weekly rail traffic however, we get petroleum products separated, we just don't get further disaggregation like crude oil versus LP gas, etc.

Thanks,
James

[Paperone75]

Excellent analysis, thank you!

[Growth Investor1]

Thanks Paperone!

[ksmith754]

Very insightful and being in the business I would say new car demand is picking up along with finding use for all existing equipment.

[Growth Investor1]

Thanks ksmith!

[wmcremins]

Railroads indicate industry improvement. Good for both.

[charles1222]

Very impressive information and insight. Where/how do I access your model portfolio(s)?

[Growth Investor1]

charles,

If you are referring to the LLGP, you can either subscribe to the marketplace service, or get more brief information by following up via direct message.

Thanks,
James