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Week 15: US Freight Rail Traffic Rises: Are Good Times Ahead?

PART:
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Part 7
Week 15: US Freight Rail Traffic Rises: Are Good Times Ahead? PART 7 OF 14

Union Pacific: How Its Intermodal Volumes Did in Week 15

Union Pacific’s intermodal volumes

In the week ended April 15, 2017, Union Pacific (UNP) hauled nearly 69,000 containers and trailers compared to ~69,500 units in the corresponding week of 2016. That figure represents a fall of 1.0% on a YoY (year-over-year) basis.

It appears that UNP’s overall freight rail traffic trend is nearly identical to the overall trend in the industry. In fact, in volume terms, Union Pacific lags far behind its close competitor BNSF Railway (BRK-B).

UNP’s trailer traffic fell 4.0% YoY. Its intermodal volumes were on the lower side of the overall figures reported by US railroad companies. If you want to compare this week’s freight volume data with the previous week’s data, check out Market Realist’s Week 14: US Freight Rail Volumes on a Growth Trajectory.

Union Pacific: How Its Intermodal Volumes Did in Week 15

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Union Pacific and intermodal volumes

For Class I railroad companies such as Union Pacific, intermodal growth assumed greater significance after the headwinds related to coal made transportation unattractive. In 4Q16, UNP’s intermodal volumes accounted for 38.5% of its total volumes, while intermodal revenues contributed nearly 20.0%.

The pace of transpacific trade in the Chinese market particularly affects UNP’s intermodal volumes. Other factors that affect its volumes include retail stockpiles and retail demand. Higher stockpiles and lower demand impact all railroad companies’ intermodal traffic numbers.

Railroad companies’ intermodal segments usually compete with long-haul trucking companies such as J.B. Hunt Transport Services (JBHT), Swift Transportation (SWFT), Knight Transportation (KNX), and XPO Logistics (XPO).

Investing in ETFs

Transportation sector investors may want to consider the iShares US Industrials (IYJ). Major US railroad companies make up 6.2% of IYJ’s portfolio holdings.

In the next part of this series, we’ll look at the rail traffic of UNP’s rival, BNSF Railway (BRK-B).

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