Understanding the Double-Digit Fall in BNSF Railway’s Intermodal Volumes
BNSF Railway’s intermodal volumes
In the first week of 2017, BNSF Railway’s (BRK-B) container traffic fell 11.6% on a YoY (year-over-year) basis to ~73,000 containers, down from ~82,000 containers in the first week of 2016. Trailer volumes fell 21% to 8,500 trailers in the first week of 2017.
The percentage rise reported by BNSF’s intermodal volumes was slightly lower than the fall reported by US railroads in the same category.
Interested in EPS? Don't miss the next report.
Receive e-mail alerts for new research on EPS
Why is intermodal important to BNSF?
BNSF Railway’s domestic and international intermodal operations are part of its Consumer Products Freight business. The business also includes automotive freight earned by the company. It’s worth noting that this segment accounted for ~31.0% of BNSF’s total revenue in 2015.
The company’s share of Western US rail traffic in 2015 was ~50.0%. The company handles a million more intermodal units every year than any other Class I railroad. Intermodal represents nearly 50.0% of BNSF’s business portfolio by volume.
BNSF’s intermodal competition
BNSF Railway faces tough competition from truckers like J.B. Hunt Transport Services (JBHT) and Swift Transportation (SWFT) in the intermodal space. Intermodal volumes are impacted by seasonality, highway-to-rail conversions, and access to certain high-traffic ports.
If you’re interested in the transportation space, you might invest in the Wisdom Tree Earnings 500 ETF (EPS). All US-born Class I railroads are included in the portfolio holdings of EPS.
In the next part, we’ll take a look at the carloads of the smallest US Class I railroad, Kansas City Southern (KSU).