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How Canadian National’s Intermodal Traffic Compares with the Industry

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Canadian National’s Intermodal volumes

In the week ended November 5, 2016, Canadian National Railway’s (CNI) overall Intermodal segment volumes fell 7.1%. The container volumes were down 6.1% in the same week compared with the corresponding week in 2015. The percentage fall in CNI’s Intermodal volumes was in contrast with the rise reported by US railroads. However, it was in line with the decline reported by Canadian railroads in the same category.

You can read more about CNI’s 3Q16 results in Market Realist’s Were Canadian National Railway’s 3Q16 Earnings a Hit or a Miss?

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CNI’s Intermodal segment

CNI’s Intermodal business contributed 26% to its revenues in 3Q16. Out of its total carloads in the same quarter, Intermodal’s share was 41.8%. Canadian National also operates one of the largest trucking services in Canada, which supplements its Intermodal business.

Canadian National’s competitive advantage comes from its sole access to the Port of Prince Rupert, BC. In addition, CNI connects Vancouver, BC, and Prince Rupert, BC, in a long arc. This provides opportunities for the company to move containers from Asia to the United States.

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 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 broad-based exposure to the transportation sector can invest in the Guggenheim S&P 500 Equal Weight ETF (RSP). All of the US-originated Class I railroads make up the portfolio holdings of RSP.

For a comparison with the previous week’s freight volume data, please read Gauging the Economy via Freight Traffic: Week Ended October 29. For more information on the major US railroad stocks, please visit Market Realist’s Railroads page.

In the next part, we’ll look at the weekly rail traffic data for CNI’s rival, Canadian Pacific (CP).

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