In the week ended December 24, 2016, Canadian National Railway’s (CNI) overall intermodal volumes rose 25.2%. While container volumes rose 25.3% that same week, trailer movement remained flat.
The company moved 39,000 containers in the 51st week of 2016, as compared to ~31,000 containers in the corresponding week of 2015. The percentage rise in CNI’s intermodal volumes was slightly lower than the increase reported by Canadian railroads overall.
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Canadian National’s intermodal business contributed 26.0% of its revenue in 3Q16. Of its total carloads in that quarter, intermodal’s share was 41.8%. Canadian National also operates one of the largest trucking services in Canada, which supplements its intermodal business.
Canadian National’s competitive advantage comes from its sole access to the port of Prince Rupert, British Columbia. CNI also connects in a long arc from Vancouver, British Columbia, and Prince Rupert. This, in turn, provides opportunities for the company to move containers from Asia to the US heartland.
CNI’s domestic segment is driven by consumer markets and by US and Canadian economic growth. Its international segment is influenced by North American economic and trade conditions. In the intermodal segment, the company faces competition from truckload companies like J.B. Hunt Transport Services (JBHT), Swift Transportation (SWFT), and Landstar System (LSTR).
If you’re looking for exposure to the transportation sector, you can invest in the Guggenheim S&P 500 Equal Weight ETF (RSP). All US-originated Class I railroads are included in the portfolio holdings of RSP.
In the next part, we’ll take a look at CNI’s archrival, Canadian Pacific Railway (CP), and its weekly rail traffic data.