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Tracking Rail Traffic for the Week Ended February 18

PART:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Part 15
Tracking Rail Traffic for the Week Ended February 18 PART 15 OF 15

Why Canadian Pacific’s Intermodal Volumes Rose

Canadian Pacific’s intermodal volumes

Canadian Pacific’s (CP) intermodal volumes have been on a progressive move for the past few weeks. In the week ended February 18, 2017, CP reported a slight rise in overall intermodal traffic. Domestic containers and trailers grew 23.3% at ~9,000 units.

However, there was a 5.9% YoY (year-over-year) drop in its international intermodal business, wherein volumes contracted to 10,000 containers and trailers from ~11,000 the year prior.

Why Canadian Pacific&#8217;s Intermodal Volumes Rose

Why Canadian Pacific&#8217;s Intermodal Volumes Rose

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In the week ended February 18, 2017, CP’s intermodal traffic rose, though the percentage gain was minuscule compared with 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 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 such as J.B. Hunt Transport Services (JBHT), Old Dominion Freight Lines (ODFL), Swift Transportation (SWFT), and XPO Logistics (XPO).

Investments

The ProShares Ultra S&P 500 ETF (SSO) invests ~7.6% in the industrial sector, which includes transportation and logistics. If you want to compare this week’s freight volume data with the previous week’s, check out Market Realist’s A Light at the End of Tunnel: Rail Traffic, Week Ended February 11.

Departures

In this series, we’ve examined the rail traffic data of major US railroads for the seventh week of 2017, or the week ended February 18, 2017. For ongoing updates on major US railroad stocks, keep checking Market Realist’s Railroads page.

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