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What Pulled Down BNSF’s Intermodal Volumes?

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BNSF’s intermodal volumes

BNSF Railway’s (BRK-B) total intermodal traffic for the week ended July 16, 2016, was down 4.3%. From 99,000 plus containers and trailers in the comparable week of 2015, intermodal traffic fell to 95,000 containers and trailers in the reported week of 2016.

In the same week, container traffic was down 2.7% on a year-over-year basis to 85,000 from 88,000 in the week ended July 19 last year. Trailer traffic declined 16% in the week ended July 16, 2016, to ~10,000 trailers from nearly 12,000 trailers in the corresponding week last year.

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Why is intermodal important to BNSF?

BNSF Railway’s domestic and international intermodal operations are part of the consumer products freight business. This business also includes automotive freight. This business segment accounted for ~31% of BNSF’s total revenues in 2015.

The company’s share of the Western US rail traffic in 2015 was ~50%. In addition, the company handles one million more intermodal units every year than any other Class I railroad. Intermodal represents nearly 50% of BNSF’s business portfolio by volume.

BNSF’s intermodal competition

BNSF Railway also faces tough competition from truckers like J.B. Hunt Transport (JBHT) and Swift Transportation (SWFT) in the intermodal space. Intermodal volumes, apart from seasonality, are also affected by highway-to-rail conversions and the carrier’s exclusive access to certain high traffic ports.

Investors interested in dividends ETFs can opt for the Vanguard Dividend Appreciation ETF (VIG). All US Class I railroads are part of the portfolio holdings of VIG.

You can compare this week’s rail data with data from the previous week in How Did North American Rail Traffic Fare in the Week Ending July 9? For more information on major US railroad stocks, visit Market Realist’s railroads page.

In the next part, we’ll go through the carloads of the US’s smallest Class I railroad, Kansas City Southern (KSU).

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