Railroad Traffic Continues Decline on Lack of Coal Shipments (GWR, CSX, UNP, NSC, KSU)

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Genesee & Wyoming Inc. (NYSE: GWR) this morning released its traffic volume report for March and for the first quarter of 2012. The news is not good, but it’s also not unexpected.

The company’s traffic in March was down -13.6% year-over-year and down -9.2% for the quarter compared with the same period a year ago. CSX Corp. (NYSE: CSX), Union Pacific Corp. (NYSE: UNP), Norfolk Southern Corp. (NYSE: NSC), and Kansas City Southern (NYSE: KSU) have not released numbers yet, but CSX and Union Pacific report quarterly earnings next week so we should know more then.

The decline at Genesee is virtually entirely due to a -42.7% drop in coal shipments in March and a -41.7% drop in coal shipments for the quarter. According to the Association of American Railroads’ latest traffic report, year-to-date coal shipments are down -10.2% on US railroads.

That’s not the largest percentage drop among freight types, but coal represents the largest volume of traffic on the nation’s railroads. US railroads have hauled nearly 200,000 fewer carloads of coal this year than they did last year. Put this down to the lowest natural gas prices in a decade.

The big gainer is petroleum products, which has risen 28.7% year-to-date, to nearly 120,000 carloads, up from about 93,000 a year ago. This is the effect of rail shipments from the Bakken shale fields of North Dakota and Montana, where there isn’t enough pipeline capacity to transport the oil to markets. But the total number is barely 10% of the coal volume.

Genesee’s shares closed up about 2.5% yesterday at $53.55 in a 52-week range of $44.38-$66.83. Shares are inactive in the pre-market this morning.

Paul Ausick

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