uploads///NSC Intermodal

Norfolk Southern’s Intermodal Volumes in Focus

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Nov. 20 2020, Updated 11:57 a.m. ET

Norfolk Southern’s intermodal

Norfolk Southern’s (NSC) total intermodal traffic rose slightly by 2.9% in the week ended August 27, 2016. The volumes in the reported week were nearly 80,000 containers and trailers—nearly the same in the corresponding week in 2015.

NSC’s container traffic rose by 10.1% from ~67,000 units in the week ended August 29, 2015, to 73,000-plus units in the week ended August 27, 2016. However, trailer traffic declined by 40.4% in the week ended August 27, 2016, on a year-over-year basis.

NSC’s sizable drop in trailer volumes is primarily attributed to the restructuring of the underperforming subsidiary, Triple Crown Services (or TCS). NSC has been shifting shippers to other intermodal lanes. The restructured TCS will focus on specific merchandise such as auto parts (TM).

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Why is intermodal traffic important?

The intermodal businesses of all major US railroads face strong competition from the trucking industry (JBHT). Although railroads are four times more fuel efficient than trucks, the fall in fuel prices made truckers more competitive.

However, with fuel prices on the rise, the intermodal volumes should pick up in the quarters to come. This is due to the cost-efficient nature of railroads on medium to long hauls, where trucking won’t be as lucrative if fuel prices goes up.

Investing in ETFs

Railroads form part of the industrial sector. Investors opting for exposure to the transportation and logistics sector can invest in the First Trust Industrials/Producer Durables AlphaDEX ETF (FXR). Major US airlines and railroads are part of FXR’s portfolio holdings.

You can compare this week’s rail data with data from the previous week in North America Freight Rail Traffic Off Track Week Ended August 20.

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

In the next part, we’ll look at the rail traffic of Norfolk Southern’s competitor, CSX Corporation (CSX).

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