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Your Freight Rail Traffic Update for the Week Ended September 24

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Part 9
Your Freight Rail Traffic Update for the Week Ended September 24 PART 9 OF 15

How BNSF’s Intermodal Volumes Compare to the Industry’s

BNSF’s intermodal volumes

BNSF Railway’s (BRK-B) total intermodal traffic for the week ended September 24, 2016, fell 4.8%. From 104,000 plus containers and trailers in the comparable week of 2015, it fell to over 99,000 containers and trailers in the reported week of 2016.

In the week, container traffic fell 4.2% year-over-year to ~89,000 containers, compared to nearly 93,000 units last year.

How BNSF’s Intermodal Volumes Compare to the Industry&#8217;s

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Even trailer traffic fell 9.8% in the week ended September 24, 2016, to ~11,000 trailers from roughly 12,000 trailers in the corresponding week of 2015. 

The fall in BNSF’s intermodal volumes was slightly higher than the fall reported by US railroads in the week ended September 24, 2016.

Why is intermodal traffic important to BNSF?

BNSF Railway’s domestic and international intermodal operations are part of the consumer products freight business. This business also includes automotive freight earned by the company. Investors should note that this business segment accounted for ~31% of BNSF’s total revenue in 2015.

The company’s share of western US rail traffic in 2015 was ~50%. In addition, the company handles one million more intermodal units each year than any other Class I railroad company. Intermodal traffic represents nearly 50% of BNSF’s business portfolio by volume.

BNSF’s intermodal competition

BNSF Railway also faces tough competition from truckers such as J.B. Hunt (JBHT) and Swift Transportation (SWFT) in the intermodal space. Apart from seasonality, intermodal volumes are also affected by highway-to-rail conversions and the carrier’s exclusive access to certain high-traffic ports.

Investors with an interest in the transportation space could invest in the Wisdom Tree Earnings 500 ETF (EPS). All US-originated Class I railroad companies are included in the portfolio holdings of EPS.

In the next article, we’ll go through the carloads of the United States’ smallest Class I railroad company, Kansas City Southern (KSU).

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