How Did Canadian National’s Intermodal Volumes Stand up to CP’s?



Canadian National’s intermodal volumes

In the week ended July 23, 2016, Canadian National Railway’s (CNI) overall intermodal traffic declined by 4%. Container traffic fell by 2.6% in the same week, as compared to the corresponding week n 2015. There was no movement in trailer volume last week, and investors should note that CNI’s intermodal volumes declined by relatively less than its US and Canadian peers.

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Why is intermodal important for CNI?

The intermodal business contributed ~24% to CNI’s 2015 and 2014 revenues. Out of its total carloads in 2015, intermodal’s share rose by 40.7% from 37.1% in 2014. Remember, Canadian National also operates one of the largest trucking services in Canada.

Canadian National’s competitive advantage comes from its sole access to the Port of Prince Rupert, BC. 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 US and Canadian economic growth. Its international segment is influenced by North American economic and trade conditions. In its 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 opting for exposure to the transportation sector can invest in ETFs like the Guggenheim S&P 500 Equal Weight ETF (RSP). All US-originated Class I railroads have exposure in RSP.

You can compare this week’s rail data from the previous week in How Did Rail Traffic Fare in the Week Ending July 16.

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


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