One would think that airlines would be dragging down the transportation sector and its exchange traded fund (ETF), but that isn’t the case in trading today. The  iShares Dow Jones Transportation Average (IYT) is trading at all-time highs, in fact.

Airlines don’t even find themselves among the top ten holdings of the fund. The top components, instead, are primarily railroads, trucking and shipping companies.

Shares of railroad companies shot higher today because one analyst upgraded Union Pacific (UNP), which is 12.5% of IYT. UNP’s shares are trading at all-time highs midday.

The 12-month target prices for two other rail companies were also raised and package shippers saw their shares rise in early trading, too, despite the fact that oil continues to climb, the Associated Press reports.

A few other rail and shipping companies are trading at all-time highs today as well, including:

• Burlington Northern Santa Fe Corp. (BNI): 9.2% of IYT
• CSX Corp. (CSX): 5.6% of IYT

The hunt for cheaper sources of fuel and the food shortage seems to be benefiting the railroads. U.S. rail companies recently posted another weekly carload gain because of more demand for coal, grain and metallic ore.

The week ending May 10, carloads were up 5% compared with the same period the previous year, reports Progressive Railroading. Metallic ores traffic rose 27.8%, grain carloads rose 18.2% and coal volume jumped 11.9%.

Year-to-date, IYT is up 18.2%.

For full disclosure, some of Tom Lydon’s clients own shares of IYT.

Tags: Coal, Energy, Sector ETFs, Transportation