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

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Part 15
Week Ended March 4: Was US Rail Traffic on the Right Track? PART 15 OF 15

How Did Canadian Pacific’s Intermodal Traffic Fare Last Week?

Canadian Pacific’s intermodal traffic

Canadian Pacific’s (CP) intermodal volumes have been rising for the past few weeks. In the week ended March 4, 2017, CP reported a slight rise of 2% in overall intermodal traffic. Domestic containers and trailer traffic rose robustly by 11.7% to about 9,000 units.

However, there was a 5.4% YoY (year-over-year) drop in CP’s international intermodal business, wherein volumes contracted to ~10,000 containers and trailers from 10,500 last year.

How Did Canadian Pacific’s Intermodal Traffic Fare Last Week?

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In the week ended March 4, 2017, CP’s intermodal traffic rose, though the percentage gain was minuscule compared with what close rival Canadian National (CNI) reported.

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).

Railroads’ intermodal segments 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 US Freight Traffic Takes the High Rail: Week Ended February 25.

For ongoing updates on major US railroad stocks, keep checking in with Market Realist’s Railroads page.

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