Canadian Pacific’s Intermodal Volumes Maintain Upward Momentum



Canadian Pacific’s intermodal volume

Canadian Pacific’s (CP) intermodal volume has been marching forward in the last few quarters. For the week ended December 10, 2016, CP reported a 9.0% rise in overall intermodal traffic. Its intermodal data reflect that domestic intermodal volumes rose 8.0%.

The company moved ~8,000 containers and trailers of domestic intermodal in the reported week, compared to ~8,000 units in the corresponding week in 2015.

International intermodal volumes rose 9.7% in the same week in 2016. CP’s intermodal volumes were in line with the overall fall in US and Canadian railroads’ intermodal volumes.

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Why is intermodal important to CP?

Domestic intermodal formed 12.3% of CP’s revenues and 17.4% of its total volumes in 3Q16. International intermodal contributed 10.7% of its revenues and 22.3% of its volumes in the same quarter.

Increased truck capacity in CP’s short-haul lane will most likely result in tough competition in the domestic intermodal space going forward. Since the company squeezes most of its domestic intermodal business from Canada, it will be largely impacted by growth in the Canadian economy.

The company’s international intermodal business consists of containerized traffic moving between the ports of Vancouver, Montreal, and New York. CP’s international intermodal growth is tied to capacity growth at these ports. In addition, retail demand and the pace of transpacific trade with China have a bearing on international intermodal volumes of other Class I rail carriers (XLI).

Intermodal of railroads mainly compete with major US trucking companies such as J.B. Hunt Transport Services (JBHT), Old Dominion Freight Lines (ODFL), Swift Transportation (SWFT), and XPO Logistics (XPO).

Next, we’ll look at the North American volumes for Genesee & Wyoming (GWR), the largest short-line operator in the United States.


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