How Did BNSF’s Intermodal Volumes Compare with US Railroads?
BNSF’s intermodal volumes
BNSF Railway’s (BRK-B) total intermodal traffic for the week ended December 3, 2016, was up 6.6%. From ~97,000 containers and trailers in the comparable week of 2015, it rose to over 103,000 containers and trailers in the reported week of 2016.
During the same week, container traffic was up 7.1% on a year-over-year basis to 89,000-plus containers from over 83,000 units in 2015.
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Like containers, trailer traffic was up 3.3% in the week ended December 3, 2016, at ~14,000 trailers from 13,000-plus trailers in the corresponding week last year. The percentage rise in BNSF’s intermodal volumes was almost twice the increase reported by US railroads in the week ended December 3, 2016.
Why is intermodal 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 revenues in 2015.
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 intermodal competition
BNSF Railway also faces tough competition from truckers like J.B. Hunt Transport (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 some high-traffic ports.
Investors with an affinity for the transportation space can invest in the Wisdom Tree Earnings 500 Fund ETF (EPS). All US-based Class I railroads are included in the portfolio holdings of EPS.
Investors interested in a comparative analysis of railroads’ 3Q16 performance may read How Major US Railroads Performed in 3Q16. For more information on US’s major railroad stocks, please visit Market Realist’s Railroads page.
In the next part, we’ll go through the carloads of the US’s smallest Class I railroad—Kansas City Southern (KSU).