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How Did Union Pacific’s Intermodal Do Compared to BNSF Railway?

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Union Pacific’s intermodal traffic

In the week ended August 20, 2016, Union Pacific’s (UNP) overall intermodal traffic declined by 6.8% on a year-over-year basis. The company’s trailer traffic declined by 38.9%.

Container traffic declined 4.9% in the reported week of 2016. In the same week, the company moved more than 72,000 containers against nearly 78,000. Against rival BNSF Railway (BRK-B), Union Pacific’s decline in intermodal volumes was slightly less in the week ended August 20, 2016.

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Why is intermodal important to UNP?

For all the Class I railroads, including Union Pacific, intermodal growth assumed significance after the headwinds related to energy commodity prices. UNP’s intermodal volumes accounted for 38.4% of total volumes, while intermodal revenues contributed nearly 20% last year.

The company’s intermodal volumes are specifically impacted by the pace of trans-Pacific trade in the Chinese market. Other factors include retail stockpiles and retail demand. Higher stockpiles and lower demand negatively impact all railroads’ intermodal traffic.

Usually, the intermodal segment of all railroads competes with long-haul trucking companies such as J.B. Hunt Transport Services (JBHT), Swift Transportation (SWFT), Knight Transportation (KNX), Hub Group (HUBG), and XPO Logistics (XPO).

Transportation-sector-specific investors can invest in the iShares US Industrials ETF (IYJ). All major US railroads make up 5.5% of IYJ’s portfolio holdings.

You can compare this week’s rail data from the previous week in North American Freight Rail Traffic Fell in Week Ended August 13.

For more information on US major railroad stocks, visit Market Realist’s Railroads page.

In the next part of this series, we’ll look at UNP’s arch rival, BNSF Railway (BRK-B), and its rail traffic.

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