In the week ended December 31, 2016, Canadian National Railway’s (CNI) overall intermodal volumes rose 6.8%. While container volumes rose 6.9% that same week, trailer movement remained flat.
The company moved 33,000-plus containers in the 52nd week of 2016, compared to 31,000 containers in the corresponding week a year before. The percentage rise in CNI’s intermodal volumes was lower than the increase reported by US and Canadian railroads overall.
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Canadian National’s Intermodal segment contributed 26.0% of its revenues 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, which 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 rival, Canadian Pacific Railway (CP), and its weekly rail traffic data.