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Week Ended March 4: Was US Rail Traffic on the Right Track?

PART:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Part 13
Week Ended March 4: Was US Rail Traffic on the Right Track? PART 13 OF 15

How Canadian National’s Intermodal Volumes Compare to Industry

Canadian National’s intermodal volumes

In the week ended March 4, 2017, Canadian National Railway’s (CNI) overall intermodal volumes rose 6%. The rise in container volumes was almost equal to the overall fall in volume that same week. Trailer movement remained flat.

The company moved just near 43,000 containers in the ninth week of 2017 as compared to over 40,000 containers in the corresponding week of 2016. The percentage rise in CNI’s intermodal volumes contrasted with the fall in overall US railroads. However, it was in tune with the rise reported by US railroads in the same category.

How Canadian National&#8217;s Intermodal Volumes Compare to Industry

How Canadian National&#8217;s Intermodal Volumes Compare to Industry

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Why is intermodal important for CNI?

Canadian National’s intermodal segment contributed more than one quarter of the company’s total revenue in 2016. Of the segment’s total carloads that year, intermodal’s share was ~42%. 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).

ETF option

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 of this series, we’ll take a look at Canadian Pacific Railway (CP) and its weekly rail traffic data.

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