Kansas City Southern lowered its revenues 4% in 1Q21

Kansas City Southern (KCS) posted a 4% drop in revenue in the first quarter of 2021, to $ 706 million.

Among other causes, the result is due to lower volumes, lower fuel surcharge and fluctuations in foreign currency.

Chemicals and petroleum

As part of that income, it obtained 231.3 million dollars in its Chemicals and Petroleum business unit, an increase of 16% year-on-year.

Inland, this group of commodities includes products such as chemicals, plastics, petroleum, liquefied petroleum gas, and refined petroleum products, such as gasoline and diesel.

Kansas City Southern transports these products through its network and through exchanges with other rail carriers.

On the one hand, the raw material groups of refined fuels and liquefied petroleum gas supply Mexican demand.

On the other hand, chemicals and plastics are used in the automotive, housing and packaging industries, as well as in general manufacturing.

Kansas City Southern transports petroleum products through its network and, as US oil refineries have continued to increase their refining capacity, they have coordinated with KCS to develop additional long-term storage opportunities that complement a fluid freight railway operation.

Industrial and consumer products

With a 16% year-on-year decline in the first quarter of the year, to $ 134 million, this group of commodities includes forest products, as well as metals and scrap.

Forest products consist of shipments to and from paper and lumber mills in the southeastern United States timber-producing region that Kansas City Southern serves directly and indirectly through its various short-line connections.

In particular, the United States is a major source of pulp and waste paper for Mexico that is shipped by rail through the Kansas City Southern network.

Metals and scrap consist of shipments of flat steel and long products, as well as other minor movements of minerals such as iron, zinc and copper.

Meanwhile, most of the steel produced and the metal ore mined in Mexico is consumed within Mexico.

Steel slab is used to make steel coil and plate products that are generally shipped by rail.

Mexican manufacturers use high-quality finished products, such as steel coils, in automobiles, appliances, the oil and gas industry, and other consumer goods that are imported from the United States through land borders and sea ports to which Kansas City Southern’s rail network arrives.

Kansas City Southern also transports steel coils, plates and pipes from minimills based in the United States and Mexico to locations in those two countries for oil drilling applications, appliances and automotive goods.

In addition, this product group includes military transports from the United States and Mexico and shipments of cement from the United States and home appliances manufactured in Mexico that are imported into the United States.

Agriculture and minerals in Kansas City Southern

With a total of 124.4 million dollars of income in the first quarter of the year (-8% annually), the group of agricultural and mineral products consists mainly of cereals and food products.

Until now, the demand for agricultural products by carriers has been affected by competition between sources of cereals and cereal products, as well as by price fluctuations in the international markets for key commodities.

In the United States, Kansas City Southern rail lines receive and originate shipments of grain and grain products for delivery to food factories and food and industrial consumers in the United States and Mexico.

Export grain shipments from the United States and imported grain shipments from Mexico include primarily corn, wheat and soybeans.

Likewise, food products mainly consist of soy flour, grain flour, oils, dried distillery grains, corn syrup and sugar.

Other shipments consist of a variety of products including ores, minerals, clay and glass used in North America.

Energy and Kansas City Southern

The group of energy raw materials includes coal, fractional sand, petroleum coke and crude oil. KCS transports unit trains (trains that transport a single product from source to destination) of coal for power plants in the central United States.

Compared to the first quarter of 2020, this group had a 2% increase in revenues, to 57.5 million dollars.

The coal originates from the Powder River basin in Wyoming and is exchanged with KCS in Kansas City, Missouri.

Coal mined in the American Midwest is transported on non-unit trains to industrial consumers such as paper mills, steel mills, and cement companies.

For distribution to oil and gas wells in the region, fracture sand originating primarily from Wisconsin, Illinois, or Iowa is delivered to transshipment cargoes located in northeast Texas, northern Louisiana, and southern Louisiana. Texas.

Above all, the fracture sand business in Mexico is for industrial purposes, such as the manufacture of bottles and glass for automobiles.

Kansas City Southern’s shipments of fracture sand to support the drilling industry have declined over time as the use of fracture sand in the basin has largely replaced fracture sand originating from the Upper Midwest.

Additionally, Kansas City Southern transports petroleum coke from refineries in the United States to various industries in the United States and Mexico, including export through the Pabtex terminal located in Port Arthur, Texas.

Most of the rail oil business originates in Canada, with spot shipments coming from West Texas, and is delivered to refineries on the US Gulf Coast and tank farms in Texas, Louisiana and Alabama.

Intermodal

The intermodal freight transportation sector consists primarily of the transportation of cargo containers or truck trailers on behalf of shipping lines, motor carriers, and intermodal trading companies with rail carriers serving as long-distance carriers.

In the first quarter of 2021, revenue for this business unit was $ 81.3 million, a reduction of 8 percent.

Kansas City Southern serves and supports the markets of the United States and Mexico, as well as cross-border traffic between the two nations.

In light of the importance of trade between Asia and North America, Kansas City Southern believes that the Port of Lázaro Cárdenas continues to be a strategically beneficial location for ocean carriers, manufacturers and retailers.

Automotive

Lastly, Kansas City Southern provides rail transportation to all facets of the automotive industry supply chain, including automakers, assembly plants, and distribution centers throughout North America.

In addition, the company transports imported and exported finished vehicles to and from various countries through a distribution facility in the Port of Lázaro Cárdenas.

With a year-on-year drop of 18%, to $ 44.1 million, this was the steepest decline.