Canadian National’s intermodal
In the week ended May 7, 2016, Canadian National Railway’s (CNI) overall intermodal traffic fell by 6%. Container traffic went down by nearly 4%, but there was no movement of trailers in the reported week in 2016. The company moved 42,000 plus containers in the same week of 2016 compared with 44,000 units on a year-over-year basis. Calgary-headquartered Canadian Pacific’s (CP) intermodal volumes declined almost twice as much as CNI’s volumes.
Why is intermodal important for CNI?
The intermodal business contributed ~24% to CNI’s 2015 and 2014 revenues. Out of total 2015 carloads, intermodal’s share was 40.7%, up from 37.1% in 2014. Canadian National also operates one of the largest trucking services in Canada under the banner CNTL.
Canadian National’s competitive advantage comes from its sole access to the Port of Prince Rupert, BC. In addition, CNI connects Vancouver and Prince Rupert in a long arc, which provides opportunities for the company to move containers from the West to the US heartland.
CNI’s domestic segment is driven by consumer markets and general US and Canadian economic growth. Its international segment is influenced by the North American economic and trade conditions. In the intermodal segment, the company also faces competition from truckload companies such as J.B. Hunt Transport (JBHT), Heartland Express (HTLD), Swift Transportation (SWFT), and Landstar System (LSTR).
The transportation and logistics sector forms part of the industrial sector. The ProShares Ultra S&P 500 ETF (SSO) invests ~7.6% in the industrial sector.
For more information on the previous week’s rail traffic, visit Market Realist’s Week Ended April 30: North American Rail Traffic Falls, Mexico Up.
In the next part, we’ll go through CNI rival Canadian Pacific’s weekly rail traffic data.