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Week Ended March 18: US Freight Rail Traffic Gains More Momentum

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Part 15
Week Ended March 18: US Freight Rail Traffic Gains More Momentum PART 15 OF 15

Reviewing Canadian Pacific’s Intermodal Traffic in Week 11

Canadian Pacific’s intermodal traffic

Canadian Pacific’s (CP) intermodal volumes have been rising for the past few weeks. In the week ended March 18, 2017, CP reported a 2.2% fall in overall intermodal traffic. However, domestic container and trailer traffic were an exception, with a marginal rise of 5.3% to ~9,000 units.

However, there was a slight fall of 0.4% YoY (year-over-year) in CP’s international intermodal business. Its volumes contracted to ~10,000 containers and trailers, similar to the previous year’s level.

Reviewing Canadian Pacific&#8217;s Intermodal Traffic in Week 11

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In the week ended March 18, 2017, CP’s intermodal traffic fell, contrasting the overall rise seen by Canadian railroad companies.

Why intermodal matters for CP

Increased truck capacity in Canadian Pacific’s short-haul lane will likely result in tough competition in the domestic intermodal space. Since the company gets most of its domestic intermodal business from Canada, it will likely 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 influence the international intermodal volumes of other Class I rail carriers (XLI).

Railroad companies’ 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 Will Surge in US Freight Rail Traffic Continue?

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

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