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A Light at the End of Tunnel: Rail Traffic, Week Ended February 11

PART:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
Part 15
A Light at the End of Tunnel: Rail Traffic, Week Ended February 11 PART 15 OF 17

This Just Lifted Canadian Pacific’s Intermodal Traffic

Canadian Pacific’s intermodal traffic

Canadian Pacific’s (CP) intermodal volumes have also been on a progressive move for the past few weeks. In the week ended February 11, 2017, CP reported a slight rise in overall intermodal traffic. Domestic containers and trailers grew 7.7%.

However, there was a 5.3% YoY (year-over-year) drop in its international intermodal business, wherein volumes contracted to ~10,000 containers and trailers from ~11,000 containers and trailers one year previously.

This Just Lifted Canadian Pacific&#8217;s Intermodal Traffic

This Just Lifted Canadian Pacific&#8217;s Intermodal Traffic

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In the week ended February 11, 2017, CP’s intermodal traffic rose, though the percentage gain was minuscule that reported by close rival Canadian National (CNI).

Why intermodal matters for CP

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 gets most of its domestic intermodal business from Canada, it will be heavily affected 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. Retail demand and the pace of transpacific trade with China also have a bearing on international intermodal volumes of other Class I rail carriers (XLI).

The intermodal segments 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).

Investments

Notably, ProShares Ultra S&P 500 ETF (SSO) invests ~7.6% in the industrial sector, which includes transportation and logistics.

Investors interested in comparing this week’s freight volume data with the previous week should investigate Market Realist’s US Economy on the Tracks: Rail Traffic, Week Ended February 4.

For ongoing updates on major US railroad stocks, keep checking Market Realist’s Railroads page. In the next part, we’ll go through Genesee & Wyoming’s carloads in January 2017.

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