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How Did Canadian National’s Intermodal Volumes Fare against CP’s Last Week?

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Canadian National’s intermodal volumes

In the week ending September 10, 2016, Canadian National Railway’s (CNI) overall intermodal fell 0.5% YoY (year-over-year). Container volumes fell 1.6% YoY last week.

Specifically, CNI moved ~40,000 containers last week, as compared to ~39,000 containers in the corresponding week of 2015. The fall in CNI’s intermodal volumes was particularly noticeable next to the rise reported by Canadian Pacific (CP) in the week ending September 10, 2016.

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Why is intermodal important for CNI?

Intermodal contributed ~24% to CNI’s total revenues in 2015, and of its total carloads that 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.

Canadian National’s competitive advantage comes from its sole access to the Port of Prince Rupert, BC. CNI also connects with Vancouver, BC, and Prince Rupert, BC, in a long arc. This access, 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 general economic growth in the US and Canada, while the company’s 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 seeking exposure to the transportation sector can invest in the Guggenheim S&P 500 Equal Weight ETF (RSP). US-originated Class I railroads all have exposure in RSP.

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

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