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How Canadian National’s Intermodal Volumes Fared against the Industry

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Canadian National’s intermodal Volumes

In the week ended August 13, 2016, Canadian National Railway’s (CNI) overall intermodal was down by 6.5%. Further breaking down the intermodal traffic, container volumes were down by 4.5% in the same week against the corresponding week in 2015.

There was no trailer movement in the reported week of 2016. The fall in CNI’s intermodal volumes was slightly higher than decline reported by US and Canadian railroads in the week ended August 13, 2016.

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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. 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 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 opting for exposure to the transportation sector can invest in the Guggenheim S&P 500 Equal Weight ETF (RSP). All the US-originated Class I railroads make up RSP’s portfolio.

You can compare this week’s rail data from the previous week in Investor Insights: Freight Rail Traffic, Week Ending August 6. For more information on US’s major railroad stocks, please visit Market Realist’s Railroads page.

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

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