Canadian Pacific’s (CP) intermodal traffic is continuing its forward progress from the last few quarters. For the week ended December 3, 2016, CP reported a 5.3% rise in overall intermodal traffic. A deeper dive into CP’s intermodal data reveals that domestic intermodal volumes were up 12.9%.
The company moved 8,500 containers and trailers of domestic intermodal in the reported week, compared with 7,500 units in the corresponding week in 2015.
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However, international intermodal volumes declined marginally in the same week in 2016. Compared with the overall decline in US and Canadian railroads’ intermodal volumes, CP’s rise in intermodal volumes bucked the trend in recent weeks.
Domestic intermodal formed 12.3% of revenues and 17.4% of total volumes in 3Q16. Plus, international intermodal contributed 10.7% of revenues and 22.3% of volumes in the same quarter. Increased truck capacity in CP’s short-haul lane could result in tough competition in the domestic intermodal space going forward. Because most of the company’s domestic intermodal business comes from Canada, it could be significantly impacted 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 the capacity growth at these ports. In addition, retail demand and the pace of transpacific trade with China influences the international intermodal volumes of other Class I rail carriers.
Intermodal segments of railroads generally compete with major US trucking companies such as J.B. Hunt Transport (JBHT), Old Dominion Freight Line (ODFL), Swift Transportation (SWFT), and XPO Logistics (XPO).
In this series, we examined the rail traffic data of major US railroads (XLI) for the 48th week during the week ended December 3, 2016.
Investors interested in a comparative analysis of railroads’ 3Q16 performance may read How Major US Railroads Performed in 3Q16. Keep visiting Market Realist’s Railroads page for more information on major US railroads.