In the week ended January 14, 2017, Canadian National Railway’s (CNI) overall intermodal volumes rose 6.5%. The fall in container volumes was almost equal to the overall volume fall that same week. Trailer movement remained flat.
The company moved ~44,000 containers in the second week of 2017, compared with ~41,000 containers in the corresponding week of 2016. The percentage rise in CNI’s intermodal volumes was in tune with the rise reported by Canadian railroads, though not with the marginal fall recorded by US railroads.
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Canadian National’s Intermodal segment contributed 26% of its revenue in 3Q16. Of the segment’s 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 is its sole access to the Port of Prince Rupert, British Columbia. CNI also connects Vancouver, British Columbia, with Prince Rupert in a long arc, which provides opportunities for the company to move containers from Asia to the North American 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 business, the company faces competition from truckload companies such as J.B. Hunt Transport Services (JBHT), Swift Transportation (SWFT), and Landstar System (LSTR).
If you’re looking for exposure to the transportation sector, you could 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.