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The US Economy’s Mirror: Rail Traffic for Week Ended November 12

PART:
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Part 9
The US Economy’s Mirror: Rail Traffic for Week Ended November 12 PART 9 OF 15

Comparing BNSF’s Intermodal Traffic with the US Railroads

BNSF’s Intermodal segment’s volumes

The total traffic for BNSF Railway’s (BRK-B) Intermodal segment for the week ended November 12, 2016, was down 2.8%. From 99,000-plus containers and trailers in the comparable week of 2015, it shrank to nearly 97,000 containers and trailers in the reported week of 2016.

In the same week, container traffic declined 2.9% on a year-over-year basis to ~86,000 containers from 88,000-plus units in the corresponding week in 2015. Compared with the US railroads’ 1.4% decline in intermodal volumes, BNSF’s fall in the same category was in tune. For a detailed review of BNSF’s 3Q16 earnings, please read Market Realist’s A Segmental Breakdown of Burlington Northern Santa Fe’s 3Q16.

Comparing BNSF’s Intermodal Traffic with the US Railroads

Comparing BNSF’s Intermodal Traffic with the US Railroads

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The trailer traffic was down 1.8% in the week ended November 12, 2016, at ~11,000 trailers from over 11,000 trailers in the corresponding week in 2015.

BNSF’s Intermodal segment

BNSF Railway’s Domestic and International Intermodal operations are part of its Consumer Products Freight business. This business also includes automotive freight revenue earned by the company. This business segment accounted for 34.8% of BNSF’s total operating revenues in 3Q16.

The company’s share of Western US rail traffic in 2015 was ~50%. In addition, the company handles 1 million more intermodal units every year than any other Class I railroad. Intermodal represents nearly 50% of BNSF’s business portfolio by volume.

BNSF’s competition

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

Investors with an affinity for the transportation space can invest in the Wisdom Tree Earnings 500 Fund ETF (EPS). All the US-based Class I railroads are included in the portfolio holdings of EPS.

For comparison with the previous week’s freight volume data, please read Market Realist’s Key Railroads’ Freight Volumes for the Week Ended November 5. You can garner more information on the major US railroad stocks on Market Realist’s Railroads page.

In the next part, we’ll look at the carloads of the US’s smallest Class I railroad—Kansas City Southern (KSU).

 
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