Major North American railroad stocks have fallen dramatically in the last few weeks as volumes continued to slump in November, driven primarily by a massive drop off in coal and petroleum products.
United States railroad volumes have fallen 1.8 percent in the first eleven months of 2015 compared to the same period a year ago, according to data from the Association of American Railroads.
Total U.S. rail traffic through November 2015 stood at 25,577,500 carloads and intermodal units, down 476,392 carloads and intermodal units from 2014. Year-to-date carload traffic has dropped 5.1 percent to 13,046,761 carloads, offset by a 1.8 percent increase in intermodal container and trailer volumes to 12,530,739 units.
For the month of November, combined U.S. carload and intermodal originations fell 6 percent year-over-year to 2,065,767 carloads and intermodal units. Carload traffic for the month stood at 1,041,605 carloads, down 10.4 percent from November 2014, while intermodal volumes slipped 1 percent to 1,024,162 containers and trailers for the month.
The November volume decline was driven primarily by decreases in coal, down 17.6 percent or 78,798 carloads from the same month last year; petroleum and petroleum products, down 20.1 percent or 12,570 carloads; and metallic ores, down 31.7 percent or 10,056 carloads.
Excluding coal, the production and consumption of which has plummeted dramatically in 2015 as a result of new, stricter EPA regulations, carload volumes dropped 5.8 percent year-over-year in November 2015.
Those decreases were offset in part by increases in miscellaneous carloads, up 32.9 percent or 5,515 carloads; motor vehicles and parts, up 4.7 percent or 3,142 carloads; and non-metallic minerals, up 6.9 percent or 1,143 carloads.
“The decline in rail carload traffic in November 2015 was broad based, reflecting manufacturing slowdowns, energy prices and policy, and the constraint of a strong dollar. Even intermodal was down in November, largely due to reduced international traffic.” AAR Senior Vice President of Policy and Economics John T. Gray said in a statement.
“Railroads are well positioned to serve their customers safely and reliably, but the economy has to cooperate. We’re hopeful that will happen soon.”
Meanwhile, major North American railroad stocks have fallen dramatically in the last few weeks as volumes continued to slump in November, driven primarily by the massive drop off in coal as well as a severe contraction in petroleum products.
Using the closing price on Friday Nov. 20 as the benchmark, the stocks of the six publicly traded Class I North American railways dropped an average of 8.56 percent in value as of close of markets Monday Dec. 7 and have continued falling in early morning trading today.
Shares in CSX Corp. were down 12.91 percent, from $29.89 per share Nov. 20 to $26.03 Monday, and have slipped an additional 2.23 percent to $25.45 per share this morning. The U.S. East Coast industry leader recently lowered its full year earnings per share guidance based on lower than expected fourth quarter volumes, particularly in coal.
Kansas City Southern fell 15.03 percent in the same time period, from $93.53 per share to $79.47 per share, and another 3.07% to $77.03 today. Union Pacific was down 10.89 percent, from $86.74 to $77.29, during that time and 1.36 percent to $76.24 today, while Canadian National dropped 8.67 percent, from $60.20 per share Nov. 20 to $54.98 last night, and 1.89 percent to $53.71 this morning.
Canadian Pacific and Norfolk Southern, who are currently engaged in very public and somewhat one-sided merger negotiations, have fallen 12.57 percent and 6.19 percent, respectively, from $149.24 per share to $130.48 and $97.56 to $91.52 since Nov. 20. CP has slipped an additional 3.91 percent to $125.38 per share in early trading today, while NS dropped another 3.87 percent to $87.99.
North American railway volumes down 1.8% in 2015
