Gauging the Economy via Freight Traffic: Week Ended October 29

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Part 15
Gauging the Economy via Freight Traffic: Week Ended October 29 PART 15 OF 15

Canadian Pacific’s Intermodal Traffic Stayed on Track

Canadian Pacific’s intermodal traffic

Canadian Pacific’s (CP) intermodal traffic has continued its forward march for the last few quarters. In the week ended October 29, 2016, CP reported a 3.8% rise in its overall intermodal traffic. A further dive into CP’s intermodal data reflects that the company’s domestic intermodal volumes rose 11.5% in the week.

The company moved over 9,000 domestic intermodal containers and trailers in the week ended October 29, compared to over 8,000 units in the corresponding week of 2015.

Canadian Pacific’s Intermodal Traffic Stayed on Track

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However, international intermodal volumes fell 1.8% in the same week in 2016. Compared to the overall falls in US and Canadian railroad companies’ intermodal volumes, CP’s rise has bucked the trend in recent weeks.

Why is intermodal traffic important to CP?

Domestic intermodal traffic formed 12.3% of CP’s revenue and 17.4% of its total volumes in 3Q16. The company’s international intermodal traffic contributed 10.7% of its revenue and 22.3% of its volumes in the same quarter.

Increased truck capacity in CP’s short-haul lane will most likely result in tough competition in the domestic intermodal space going forward. Since the company squeezes most of its domestic intermodal business from Canada, it will be largely affected by the growth of the Canadian economy.

The company’s international intermodal business consists of containerized traffic moving between the ports of Vancouver, Montreal, and New York. CP’s international intermodal growth is tied to capacity growth at these ports. In addition, retail demand and the pace of transpacific trade with China affect the international intermodal volumes of other Class I rail carriers.

Intermodal railroad traffic mostly competes with major US trucking companies such as J.B. Hunt Transport Services (JBHT), Old Dominion Freight Line (ODFL), Swift Transportation (SWFT), and XPO Logistics (XPO).

In this series, we’ve examined the rail traffic data of major railroad companies (XLI) for the 43rd week of 2016. For a comparison with the previous week’s freight volume data, read Investor Insight into Freight Rail Traffic for Week Ended October 22.

Keep visiting Market Realist’s Railroads page for more information on major US rail companies.


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