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US Freight Rail Traffic Closed 52nd Week on a Positive Note

PART:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Part 15
US Freight Rail Traffic Closed 52nd Week on a Positive Note PART 15 OF 15

Behind Canadian Pacific’s Intermodal Volumes Growth

Canadian Pacific’s Intermodal volumes

Canadian Pacific’s (CP) intermodal volumes have been marching forward for the past few quarters. For the week ended December 31, 2016, CP reported a substantial rise of 13.8% in overall intermodal traffic. This intermodal data indicates that the rise was led by a domestic intermodal business, wherein volumes rose 31.5%.

Notably, CP’s international intermodal business volumes jumped 4% due to holiday festivities and the close of the financial year.

Behind Canadian Pacific’s Intermodal Volumes Growth

Behind Canadian Pacific’s Intermodal Volumes Growth

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Intermodal and CP

The Domestic Intermodal segment made up 12.3% of CP’s revenues and 17.4% of its total volumes in 3Q16. International intermodal contributed 10.7% of its revenues and 22.3% of its volumes in the same quarter.

Increased truck capacity in CP’s short-haul lane will most likely result in tough competition in the domestic intermodal space going forward. Since the company squeezes most of its domestic intermodal business from Canada, it will be heavily impacted by growth in 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 capacity growth at these ports. In addition, retail demand and the pace of transpacific trade with China have a bearing on international intermodal volumes of other Class I rail carriers (XLI).

Intermodal of railroads mainly compete with major US trucking companies like J.B. Hunt Transport Services (JBHT), Old Dominion Freight Lines (ODFL), Swift Transportation (SWFT), and XPO Logistics (XPO).

Additional industry analysis and updates

If you’re interested in comparing this week’s traffic data with the previous week, you can refer to Market Realist’s Pre-Christmas Freight Rail Traffic Rides High on Festivities. For a comparative analysis of railroads in 3Q16, please refer to How Major US Railroads Performed in 3Q16.

For ongoing updates on major US railroad stocks (UNP), keep checking in with Market Realist’s Railroads page.

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