How CNI’s Intermodal Volumes Compared with the Industry



Canadian National’s intermodal volumes

In the week ended December 3, 2016, Canadian National Railway’s (CNI) overall intermodal volumes were up 5.3%. The container volumes were up 5.7% in the same week against the corresponding week in 2015.

The company moved ~44,000 containers in the reported week of 2016 against ~42,000 containers in the corresponding week of 2015. The percentage rise in CNI’s intermodal volumes was in line with the rise reported by US and Canadian railroads.

Investors interested in CNI’s 3Q16 results can read Were Canadian National Railway’s 3Q16 Earnings a Hit or a Miss?

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Why is intermodal important for CNI?

Intermodal contributed 26% to CNI’s 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 serving the intermodal business.

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

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

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


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