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Freight Rail Traffic for the Week Ended December 10

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Part 9
Freight Rail Traffic for the Week Ended December 10 PART 9 OF 17

BNSF’s Intermodal Volumes Compared to US Railroads

BNSF’s intermodal volumes

BNSF Railway’s (BRK-B) total intermodal traffic for the week ended December 10, 2016, rose 5.3%. In the same week, container traffic rose 6.6% on a year-over-year basis to ~90,000 containers from nearly 85,000 units in 2015. The percentage fall reported by BNSF in containers and trailer volumes was slightly higher than the fall reported by US railroads.

BNSF’s Intermodal Volumes Compared to US Railroads

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Unlike containers, trailer traffic fell 2.7% in the week ended December 10, 2016, to ~13,000 trailers, from almost 14,000 trailers in the corresponding week last year. The percentage rise in BNSF’s intermodal volumes was more than twice the rise reported by US railroads in the same week.

Why is intermodal important to BNSF?

BNSF Railway’s domestic and international intermodal operations are part of its consumer products freight business. The business also includes automotive freight earned by the company. It’s worth noting that this segment accounted for ~31.0% of BNSF’s total revenues in 2015.

The company’s share of Western US rail traffic in 2015 was ~50.0%. The company handles a million more intermodal units every year than any other Class I railroad. Intermodal represents nearly 50.0% of BNSF’s business portfolio by volume.

BNSF’s intermodal competition

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

If you’re interested in the transportation space, you can invest in the Wisdom Tree Earnings 500 ETF (EPS). All US-born Class I railroads are included in the portfolio holding of EPS.

For more information on US major railroad stocks, visit Market Realist’s railroads page.

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

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