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Will Surge in US Freight Rail Traffic Continue?

PART:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
Part 9
Will Surge in US Freight Rail Traffic Continue? PART 9 OF 17

Decoding BNSF Railway’s Intermodal Volumes in the 10th Week

BNSF Railway’s intermodal volumes

In the tenth week of 2017, BNSF Railway’s (BRK-B) overall intermodal traffic rose 11.5% on a YoY (year-over-year) basis to ~96,000 containers and trailers, up from ~86,000 containers in the corresponding week of 2016. The container volume rose 13.3% to slightly less than 86,000 containers in the tenth week of 2017.

However, trailer volumes slightly contracted by 2.1% YoY (year-over-year) to ~10,000 trailers. BNSF’s percentage rise in intermodal traffic was more than twice the increase reported by US railroads in the same category.

Decoding BNSF Railway&#8217;s Intermodal Volumes in the 10th Week

Decoding BNSF Railway&#8217;s Intermodal Volumes in the 10th Week

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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. This segment accounted for ~31% of BNSF’s total revenue in 2015.

The company’s share of Western US rail traffic in 2016 was slightly less than 50%. BNSF handles a million more intermodal units every year than any other class I railroad, and intermodal represents nearly 50% of BNSF’s business portfolio by volume.

BNSF’s intermodal competition

BNSF Railway faces tough competition from truckers such as 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 could consider the WisdomTree Earnings 500 ETF (EPS). All US-born Class I railroads are included in its portfolio. Investors interested in comparing this week’s freight volume data with the previous week’s should check out Market Realist’s Week Ended March 4: Was US Rail Traffic on the Right Track?

In the next part, we’ll take a look at the carloads of the smallest US Class I railroad, Kansas City Southern (KSU).

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