uploads///CNI Carloads

How Is Canadian National’s Intermodal Holding Up?

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Dec. 4 2020, Updated 10:53 a.m. ET

Canadian National’s intermodal volumes

In the week ended August 6, 2016, Canadian National Railway’s (CNI) overall intermodal declined by 5.1%, and container traffic fell by 3.8% over the corresponding week last year. There was no movement in trailers in the reported week of 2016. The fall in CNI’s intermodal volumes was in tune with the decline reported by US and Canadian railroads.

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Why is intermodal important for CNI?

The intermodal business contributed ~24% to CNI’s 2015 and its previous year’s revenues. Out of its total carloads last year, intermodal’s share was 40.7%, up from 37.1% in 2014.

Remember, Canadian National also operates one of the largest trucking services in Canada, and another of Canadian National’s competitive advantages comes from its sole access to the Port of Prince Rupert, BC (British Columbia). In addition, CNI connects with Vancouver, BC, and Prince Rupert, BC, in a long arc. This, in turn, provides opportunities for the company to move containers from Asia to the US heartland.

CNI’s domestic segment is driven by consumer markets and the 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).

Investors looking for exposure to the transportation sector can invest in ETFs like the Guggenheim S&P 500 Equal Weight ETF (RSP), which has US-originated Class I railroads in its portfolio holdings.

In the next part, we’ll go through Canadian Pacific’s (CP) weekly rail traffic data.

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