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US Freight Rail Traffic on Track, but Mexico Stays Derailed

PART:
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Part 9
US Freight Rail Traffic on Track, but Mexico Stays Derailed PART 9 OF 14

BNSF Railway’s Intermodal versus UNP’s

BNSF’s intermodal volume in week 27

BNSF Railway’s (BRK-B) total intermodal volumes (containers and trailers) rose 8.3% in the week ended July 8, 2017. The company moved ~86,000 intermodal units that week, compared with over 79,000 units in the week ended July 9, 2016.

A further breakdown of intermodal volumes reflects containers grew at a faster rate than trailers grew. While BNSF’s containers rose 8.4% to ~77,000 units, trailers gained 7.4% to ~9,000 units in the 27th week of this year.

BNSF Railway&#8217;s Intermodal versus UNP&#8217;s

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On the intermodal front, BNSF Railway left behind rival Union Pacific (UNP) in terms of percentage volume growth in the reported week. While US railroads reported a 3.7% rise in intermodal traffic, BNSF’s 8.3% gain stole the show.

BNSF’s cumulative intermodal volumes

In the first 27 weeks of 2017, BNSF reported the maximum percentage gain in volumes among all its Class I peers. Compared with the 2.7% gain in intermodal volumes by US railroads, BNSF posted a 5% rise in the same category.

Containers account for roughly 90% of total intermodal volumes, and BNSF reported 5.4% volume gains in containers, compared with its 2.4% rise in trailer traffic. Other Class I railroads reported a higher rise in trailer volumes than in containers in the first 27 weeks of the year.

Domestic intermodal

On the domestic intermodal front, BNSF hopes to convert a portion of its ~8.0 million truckloads over the next few quarters.

Intermodal growth for railroads also depend on consumer spending, highway-to-rail conversions, and momentum in the international market. Higher fuel prices also drive railroad intermodal business. In the current scenario, the intermodal growth for all US Class I railroads is expected to remain subdued.

ETF investment

Investors wanting to invest in transport and logistics stocks can opt for the SPDR S&P Transportation ETF (XTN). This ETF has around 40% in major trucking (JBHT) and railroads (NSC) in the United States.

Now let’s move to Kansas City Southern (KSU).

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