Which Are The Prominent Growth Areas For Rail Companies This Year?

-5.93%
Downside
37.31
Market
35.10
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The year 2016 has been characterized by top line pressure for rail companies, as a result of weakness in the shipments of most commodity groups. Nearing the midway point in the year, total rail traffic has fallen around 8% year-over-year. Weakness in demand for coal as a result of low gas prices, weak steel shipments as a result of competition to the domestic industry from imports, and weak shipments of petroleum products as a result of a decline in drilling activity due to low oil prices, are some of the major factors contributing to the sharp decline in overall rail shipments. However, auto shipments and chemicals have been two bright spots for railroad companies rising 4.4% and 2.5% respectively year-over-year. Light-duty truck sales have boosted overall auto sales in the U.S., boosting rail automotive shipments as well, whereas steady U.S. economic growth has boosted manufacturing activity and the demand for, and production of, industrial chemicals, as well as the rail shipments of these commodities. Chemicals and auto shipments are likely to be the two major growth areas for rail companies in terms of shipments for the full year 2016 as well.

Bright Spots for rail industry

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for CSX

 

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